Your self-assessment tax return – early to start, early to finish
It’s always best to file your tax return well before the deadline. That way, if you are due to make any substantial payments, you have time to prepare, without damaging your cash flow. You won’t have to endure the crippling deadline panic.
For January 2019, a record high number of 93.68% of tax returns were submitted on time, a cool 10.8 million, 735,258 of those people left it until the last day and likely suffered for it. The only way to relax when it comes to tax is to get it done early. To do that, you need to start thinking about the three W’s as soon as possible – what, when, and who.
As early as possible, you need to find out what taxes you are responsible for paying. If you are self-employed, you will be required to submit a self-assessment tax return, and depending on what type of business or trade you engage in, you will be responsible for paying a variety of taxes. These might include:
- National Insurance
- Income tax
- Corporation tax
- VAT (Value Added Tax)
- Business rates
Not everyone who is self-employed will need to pay all of these taxes, however. Sole traders are usually only required to pay National Insurance and income tax to HMRC. In your business journey, finding out what taxes you need to pay as soon as possible puts you in a great position. It allows you to estimate the amount of tax you’ll need to pay and allow you to prepare.
If you need to submit a self-assessment tax return, you’ll need to know when you have to do it. Finding out you have a tax return deadline in a couple of days is sure to ruin anyone’s week, and missing it could result in a minimum fine of £100. Stay on top of your deadlines. You will need to make a note of the following:
- The registration deadline for online tax returns – this year it was 5th October 2020
- Paper tax return deadlines – this year it was 31st October 2020
- The self-assessment tax return deadline – 31st January 2021
- The payment deadline – 31st January 2021. If you make advanced payments towards your bill, there is an extra payment deadline of 31st July 2021. Due to the current situation (COVID-19), there have been options for deferring payments, for those who have been impacted financially.
Who is going to complete your tax return? Is it going to be you or will you hire an accountant? There are pros and cons to both methods, often depending on what type of business you are operating.
Sole traders may find the cost of an accountant outweighs the benefits if the work required to complete the tax return is small. But, as businesses grow, the impact of the 96 hours SMEs waste on accounting start to take their toll on profit margins and business growth. In these cases, hiring an experienced accountant to take the weight off your shoulders can open new opportunities for your business to become more productive.
If you need someone to lighten the load when it comes to completing your tax return, get in touch with Big Hand on 0161 327 2911. As experienced accountants, we can complete your tax return seamlessly and on time. We’ll show you all the best ways to make your tax return more efficient.