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5 Reasons to Tackle Your Self Assessment Now
by Startacus Admin
5 reasons to tackle yourSelf Assessment now (rather than waiting until the deadline)
If you’re running a small business, you’re probably now facing the prospect of completing and filing a Self Assessment tax return.
But, if you’re like the millions of people who wait until the deadline is looming close before filing every year, it’s also unlikely that you’ve even started to think about your tax return yet - especially considering the January 31st deadline is still more than a month away.
However, by taking time out now to tackle your tax return rather than waiting until the last moment, you may actually be able to save your business a lot of time, hassle and money in the long run. Emily Coltman FCA, Chief Accountant to FreeAgent - who provide a multi-award winning online accounting software for small businesses and freelancers - suggests five reasons to get your Self Assessment sorted now.
You have more time to register
If this is the first year you’ve prepared a tax return, you’ll have to register with HMRC in order to file your returns online. This involves HMRC sending you an activation PIN code in the post, which takes at least 7 days to arrive.
Register with HMRC now, so you’ll have that activation code in plenty of time. You don’t want to be starting the whole process from scratch at the end of January when you realise that your code didn’t arrive!
You’ll avoid incurring any fines
This is perhaps the most obvious benefit of filing early, but it’s also one of the most important. By getting your tax return out of the way and submitted to HMRC long before the January 31st deadline passes, you won’t incur any fines from HMRC for filing late.
Those fines are as follows:
A £100 instant fine for not submitting your return by the January 31st deadline
£10 a day fines for up to 90 days if you don’t file by April 30th
A £300 fine (or 5% of the tax you owe – whichever is the greater number) if you still don’t file your tax return for 90 days after April 30th
An additional £300 (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year
Additional penalties if HMRC believes you are intentionally delaying your filing. This may include a fine of up to 100% of the amount of tax you owe
Get your Self Assessment sorted and file your tax return now to avoid having to pay any of these penalties!
Your figures are more likely to be accurate
When you leave everything until the last moment and you’re rushing to meet a deadline, that’s when you’re more at risk of making mistakes. So the longer you wait to tackle your tax return, the more likely it is that you will forget to include something - such as interest on a particular bank account - or to enter incorrect figures.
Give yourself plenty of time and save yourself the worry of trying to pull all your figures together in a rush. And remember that you can also re-submit your tax return for no additional charge if you discover errors before the deadline - so even if you file now, you can still do a final double-check before January 31st and have time to make any final amends.
If you want HMRC to collect any tax you owe by changing your tax code, you’ll have to file your tax return online by 30th December. You’ll only be able to do this if you owe less than £3,000 in tax, and if you have a tax code (which would be if you are employed and pay tax under PAYE, or if you receive a taxed private pension).
You’ll be clear for the New Year
The start of the New Year is the time when many small business owners like to start working towards their business resolutions - not to start worrying about tax returns. By getting Self Assessment out of the way now, you’ll clear the decks for January and give yourself a better chance of being able to review your profit margin and customer list, and see whether there are any new markets you could be branching into.
Emily Coltman FCA is Chief Accountant to FreeAgent, who provide the UK’s market-leading online accounting system specifically designed to meet the needs of micro businesses and freelancers.
FreeAgent enables sole traders and directors of limited companies to file their Self Assessment tax returns from within the FreeAgent system, rather than through HMRC Online. Try it for free at www.freeagent.com