CHECKLIST
Year-End Checklist for Freelancers
About ninety minutes, and the first twenty five have to happen before the date rather than after it. Sole traders now align to the tax year ending 5 April, and everything in the opening section stops being available the moment that date passes.
- Five sections, eighteen checks, ninety minutes
- The decisions that expire on 5 April, placed first
- Why your first January is 150 per cent of a year’s tax
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Who this checklist is for
Freelancers and sole traders approaching 5 April who want the decisions made while they are still available, rather than reported on afterwards by an accountant who can only tell you what you did.
You do your year-end work after the year end
Then most of this list is already unavailable to you. Equipment, a pension contribution and any invoice you are writing off all have to happen before the date to count for the year. A laptop bought a day before gets its relief a full year earlier than the same laptop bought a day after.
You have work sitting across the date
Invoices raised and not paid are income for the year you raised them, not the year the money turns up. Work done and not yet invoiced belongs to this year too, and leaving it out understates both the profit and the size of the business. The commonest error is the opposite one: a deposit and a final invoice counted twice for the same job.
You reserved one year’s tax and this is your first January
Then you are short, and by a predictable amount. Reserving a year’s worth is exactly right from the second year onwards and badly wrong in the first, because the first January carries the whole balancing payment plus half again on account of the year already running.
FACTS
Why a quarter of it has to happen first
Capital purchases, pension contributions, bad debts you are writing off and any decision about deferring an invoice all stop being available once 5 April passes. After that your accountant is describing the year rather than shaping it, and the bill is whatever the decisions you already made produced.
18 checks
Five sections
90 minutes
Twenty five of them before the date
FACTS
The number to know before January
On a £55,000 profit the income tax and Class 4 come to £11,789, around a fifth. In your first year with payments on account, that January asks for £17,683: the whole balancing payment plus half again. From the second year it settles to £5,894 in January and £5,894 in July.