If you choose to freelance through a Limited Company then your personal finances are separate to your company’s finances - you and your company are separate legal entities, therefore you as a director have to prepare a personal self-assessment tax return each year.
The basics if you freelance through a Limited Company Your personal tax return will give HMRC details of the amount of money you paid yourself as a salary and how much you received in dividends from your company.
You must also include details of:
- Any other investments (stocks and shares) you may hold
- How much interest you received on your savings
- If you made any money from foreign investments
- Money received from renting out any property.
There are some reliefs which will reduce your tax liability. If you made pension contributions during the year or gave money to charity, these both have to be declared on your return as well.
The personal tax year runs from 6 April to 5 April which will probably be different to your company’s financial year.
Your Self Assessment tax return is usually due at HMRC on 31 January following the end of the tax year, for example 6 April 2012 - 5 April 2013 would be due with HMRC before 31 January 2014.
For 123 Way client personal tax return season will start in the next month so expect to receive an email from us detailing exactly what we need. If you are not on The 123 Way then we can still prepare your 2012-13 return for you, simply contact us today.