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We’re coming to that time of year again where we’ll soon be seeing Self Assessments popping through the letterbox. Not something that the majority of people look forward to receiving but something that many of us have to do. Whether you are a sole trader, freelancer, small business owner or contractor, you’ll be required to complete a self-assessment tax return.
In 2018, 2.6 million people had still not filed their tax returns by the 29th January - just two days before the deadline date of 31st January. Historically, the deadline date is the single busiest day for filing!
Hopefully you’re not a person to procrastinate and do like to get ahead and organised, however if you are a procrastinator, here are our reasons and benefits as to why you should complete a self-assessment early:
It can take timeIf you’re new to filing, it’s not a case of simply logging in and getting started, you have to register and there’s a process involved. It can take longer for the process to happen as we approach January. You’ll need two parts of the puzzle to complete your self-assessment, first being your UTR - unique taxpayer reference, which is sent in the post. Secondly, you’ll need a PIN number, which again is sent in the post, for you to be able to access the system. If you’re leaving this until the last minute, you could be waiting until after the deadline, which will result in penalties.
Avoid the penalties!If you end up missing the deadline, you’ll automatically be given a penalty fine. This is broken down into the following: • A £100 instant fine if you miss the January 31st deadline• £10-per-day fines (for up to 90 days to a maximum of £900) if you haven’t filed by 30th April (3 months)• A £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed after another 90 days (6 months)• Another £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year (12 months)• Additional penalties – including up to 100% of owed tax – if HMRC believes you are intentionally delaying your filing.You can estimate your penalty for late assessments here on the Government website.
Enjoy your festive season!Deadline date for self-assessments is 31st January - and January is a busy time anyway for anyone! We’ve had Christmas, school holidays, festivities plus it’s the start of a new year where business plans and strategies comes into play. The last thing you want to be concentrating on is a self-assessment tax return! But every year there are a large amount of business owners who do leave it close to the deadline date to complete their tax returns. Complete and finish the process early and you can rest assured during the festivities and spend time with family and friends rather than the books!
Give yourself timeGathering all the information that you need to be able to put your self-assessment together can be overwhelming. If you’re not one for being organised, you may have mislaid receipts or struggle with obtaining bank statements to reconcile - it can be hard work if rushing at the last minute. By giving yourself time to collate documents and paperwork, allocating time to decipher what needs to be recorded, you’ll be in a better position which a clearer mind, to ensure that it’s correct with no mistakes.
Ensure you have the funds to payWhen you submit your self-assessment, you’ll be presented with how much tax you owe for that tax year. By leaving it to the last minute, you could be slapped with a large tax bill that you were not expecting - will you have the funds to be able to pay? The tax bill will need to be paid by 31st January. Just think, complete your tax return in August or September and you’ll have 4-5 months to be able to collate the money and pay HMRC.
You could be owed moneyNot only is it a time for paying your tax bill, you may be in with a refund in tax funds! How much better would it be to receive those funds prior to Christmas than afterwards! The earlier you process your tax return, the quicker you’ll receive any money owed to you. And the earlier you submit it, the less busy HMRC will be, meaning that they will be able to process your refund quicker.
Here at 2020 Accountancy, we understand what small business owners, freelancers, contractors and the self-employed have to manage and cope with on a monthly basis. We understand the importance of being on top of your finances and the juggle of managing the business accounting on your own - and that’s where we excel! Don’t struggle alone, don’t leave your self-assessment tax returns to the last minute - we can help!By passing your self-assessment over to us now, you can be assured that it will be submitted on time, accurately without the hassle of last-minute distress. You focus on what you love to do, we can handle the accounts! Get in touch if you’d like to find out more, or chat to our friendly accounting team.