Do you need to complete a self assessment tax return?

  With the impending Self Assessment tax return deadline approaching, Heather Dore, Regional Manager of Easy Accountancy answers some crucial and commonly asked tax return questions from hairdressers. I am a hairdresser and I rent a chair in a salon, do I need to note this monthly cost on my tax return? As a hairdresser the cost of renting a chair in a salon is eligible to be claimed as an expense, which means you can receive tax relief on this cost. To claim this cost as an expense you will need to note the total amount on your tax return. Your total yearly expenses will then be deducted from your total annual income. You are only required to pay income tax on your income and so you are not required to pay tax on expenses. Being a hairdresser I change my hair cut and colour regularly to keep up with trends and inspire my clients, can I claim my haircare costs as an expense? A business expense is a cost that is incurred solely and exclusively for business purposes. As a hairdresser some examples of costs that could be classed as expenses are equipment (scissors, styling tools etc.), hair products, relevant training courses and marketing. Although you may feel that maintaining your hair is important for your image as a hairdresser, it is not directly relevant to the running of your hairdressing business and so the cost of your personal haircare cannot be claimed as a business expense. I am a mobile hairdresser and most of my clients pay me in cash, I record my earnings in an appointment book and issue sales receipts, is this satisfactory bookkeeping to file my tax return? When clients pay in cash it really pays to be organised. Make sure that you keep a record of all the payments that you receive from clients, whether this is in a spreadsheet or in a written accounts book. It is recommended that you keep a copy of each sales receipt issued for seven years in case HMRC ever ask for proof of income. I sometimes receive tips from my clients; do I need to declare tips as part of my income on my tax return? The short answer is yes. Tips are seen to be part of your salary and so should be declared on your tax return in the same way as the rest of your income is. When do I have to complete my tax return by? The deadline for the upcoming 2013/14 tax year is:

• Online returns 31^st January 2015

What happens if I miss the tax return deadline? If you are planning to submit a paper return and miss the paper returns deadline (October 31^st 2014) then you will need to submit your return online via the HM Revenue and Customs (HMRC) website. If you miss the online returns deadline you will automatically incur a penalty of £100. If your return is three months late you will incur a further penalty of £10 for each day your return continues to be late up to a maximum of £900 or 90 days. If HMRC have not received your return six months after the deadline you will incur a further fine of either £300 or five per cent of your total tax bill, whichever is the larger amount. If your return is 12 months late you will again incur a further penalty of either £300 or five per cent of the total tax due. You may then be liable for further penalties depending on your circumstances.