By Lee Murphy, accountant and founder of PandleCompleting tax returns is an inevitable consequence of running a small business, and over 800,000 people ended up missing the January tax submission deadline last year!
If you are yet to complete your tax return, you must do it now, particularly as the tax return deadline is also the tax payment due date, so you may need time to get funds together. If it’s your first year in business or your profits have increased, the chances are you will need to pay more than expected, which means this year you will have to make two payments towards your next tax bill. The first is due on 31 January and the second on 31 July.
Organise your paperworkMake sure to have all your paperwork together before sitting down to start the online process as this both reduce the pain and chance of mistakes. Typical paperwork you will need to hand includes:
• Details of your earnings from your business: salary, dividends and taxable expenses (which will be on your P60) including details of expenses
• Any Gift Aid payments
• Pension payments
• Details of other sources of income, such as savings, shares, rental income and any royalties.
The online gatewayYou can find the weblink to start your submission here, and the website guides you through the process and is very user friendly.
However, bear in mind that if it is your first time submitting tax return using the online portal you will need the following:
• Your Unique Taxpayer Reference (UTR), which you will find on your registration letter from HMRC
• To be enrolled for online services which you can do simply by creating a Government Gateway account
• Activate the services using the code you will be sent by post
If you get halfway through and need to track down something, do not fear. You can save it half way through. But as we get closer to the deadline, the HMRC system becomes slower and slower due to the volume of users… so start ASAP to beat the rush to avoid playing the waiting game too!
What if you have not sorted out your business’s income?If you are self-employed and have not completed your paperwork for the financial year ending 2017 then you are in bad shape, but can still get it done with concerted effort.
You could try to find a book-keeper at the last minute, but they will already be manically busy this month. I’d suggest using a simple book-keeping software to sort out your business outgoings, incomings and expenses for the tax return. There are even free ones online with basic functionality that will make doing this far quicker and simpler than the alternative of paper and Excel.
Consequences and difficulties of filing lateFailing to meet the deadline bears an immediate penalty of £100, increasing over time the longer you leave it. It’s an unnecessary loss when you can easily avoid it by tackling the submission now.
For the next financial year (2017/18) you can submit from 6 April 2018, so be organised and make a note to get your details submitted earlier. You need to submit before 30 December if you want HMRC to automatically collect tax from your wages and pension.
So select a quiet period and make sure that, next year, you submit before the Christmas holidays, as opposed to a few weeks before the deadline, as rushing to complete a tax return is one bit of stress we can all do without.