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Act now to beat the self-assessment rush


By Lee Murphy, founder of Pandle

With the festive season just days away and all the demands Christmas hoists on small businesses, it could be tempting to forget that Santa’s visit will be closely followed by the taxman at the end of January. While self-assessment could be one of the most stressful times of the year for many people, it needn’t be so if you are prepared.

With around 11 million people required to complete a self-assessment tax return every year, those who leave it to the last minute could find themselves battling with online crowds akin to the January sales. Some 746,000 people failed to submit on time last January, each risking a £100 fine.

There are attractions to completing the return early. Not only will you know how much HM Revenue & Customs (HMRC) expects you to pay this year, but it also means you are top of the queue for refunds if you have overpaid. Remember, the tax return deadline is also the tax payment due date, so you may well need time to get some funds together.

If you are among the tens of thousands waiting to do the sums in January, the Christmas break will give you the time you need to pull together the paperwork needed to beat the last-minute self-assessment rush. Doing so will mean when you return in January you won’t be forced to deal with a financial mess.

This handy guide will help you survive the self-assessment blues:

Get organised

Getting on top of your finances is an absolute must if you are going to have the documents you need to complete the return.

Before sitting down to complete the form, make sure you have all the paperwork you need. You will need your P60 (even if it’s been issued by your own limited company), which will give you the information needed to record your income and the tax you paid in your self-assessment year. 

If you are a sole trader, you will need to declare your total income minus any business expenses. It’s advisable to have the figures organised, so you can easily tot up your annual income.

In addition, you will need to tell HMRC about charitable donations, as well as changes to your pension pot. You will also need to declare any other sources of income, such as interest earned on savings, shares, rental income and any royalties.

Having all your documents in order will help you ensure that you are put in the right tax bracket and paying the correct amount.

Get with the digital age

Even if you have left it late to get organised, there is plenty of help online to assist you – a lot of it is free of charge. Accounting software can help you speed up your bookkeeping tasks, saving you a huge amount of time.

With the use of functions such as automatic bank feeds and file imports, transactions can be categorised in seconds meaning you have more chance of making the deadline. Due to the nature of accounting software it will also reduce the scope for error which means you pay the right amount of tax and reduce your risk of an HMRC investigation.

Payment on account

For many, payment on account can be a confusing area. Essentially it is a payment made twice a year by those eligible for self-assessment to reduce the cost burden. 

If it’s your first year in business or your profits have increased, the chances are you will need to pay more than expected under the payments on account system. It is calculated by looking at your previous year’s tax bill. The first instalment is due on 31 January and the second on 31 July.

Don’t delay

If you’re still tempted to delay the admin, it’s worth remembering that penalties for late notification start at £100 and will rise significantly until you have filed and paid up. HMRC is a relentless adversary and will not be afraid to track you down. 

Getting organised for the self-assessment deadline will put you in a good position for the year ahead. Staying on top of your finances throughout 2019 could mean next Christmas is an even more festive affair.