The dreaded self-assessment tax return
With the self-assessment tax return deadline looming, this is the time many freelancers and ‘solopreneurs’ start panicking!
Many find filling in their tax return an onerous prospect and, as a result, it’s traditionally a task which gets left until January, with some only just getting it in on time: in 2016, 385,000 people filed their returns on 31 January, narrowly avoiding the £100 penalty – even so, an anticipated 870,000 returns were still to be filed, which also suggests that hundreds of thousands of people are struggling to do their own returns.
In fact, recent research shows that 63% of sole traders manage their own submission, with an unsurprising 55% saying they don’t like the process! 45% of people spend 5 hours or more on doing their tax return, with 22% spending more than 10 hours on the task. That’s a lot of time which could have been better spent on their core business.
As if the yearly bind of tax returns isn’t enough, by 2020 the Government will completely change the way they collect taxes, saying that: “By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. For the vast majority, there will be no need to fill in an annual tax return.” Instead, from April 2018, all businesses will be required to update HMRC on a quarterly basis. However, if your self-employment income is a secondary source or you are a landlord, you will only need to do this if your income is more than £10,000 a year.
Currently, 78% of small businesses are compiling their costs and expenses without the use of specialised software, despite the plethora of apps available to make the process easier.
What to do if you are panicking
See an accountant! If you are struggling to get your self-assessment tax return in by 31 January, or are worried about how you will be affected by the Government’s new ‘Making tax digital’ policy, it’s time to seek professional advice and help.
If you would like help with all aspects of your business accounting, management and advice, contact us for further details.