For many self-employed, freelance and business mums, the New Year means a last minute panic to get your self-assessment tax return completed before the end of January deadline. But this year, you’re being advised to start sooner.
The Association of Chartered Certified Accountants (ACCA) advises starting your annual finance marathon as early as possible this year, to avoid facing a fine from the tax man.
Start your finances early and beat the deadline
For the past six years, HMRC has required anyone completing a self-assessment online return to send their forms to them by the end of January – and in 2012 they issued 850,000 fines for late and incorrect filing. If you don’t want to risk being included in that number this year, it’s wise to start your calculations before the Christmas turkey has got too cold.
As Chas Roy-Chowdhury, ACCA head of taxation says:
“The end of January may seem like a long way off but it will come round quicker than you think. My advice would be to get your return done as early as possible. The earlier you start to do it, the more time you have to check that you have everything to complete it. As you may find for instance that you do not have all the interest statements you need.
HMRC won’t hesitate in fining you if there are mistakes in your tax return. The last thing anyone needs is a wholly avoidable fine from the tax man, especially after the expense of Christmas.”
And if you’re thinking of saving money by doing it yourself, Chas Roy-Chowdhury also suggests that you may want to rethink your plan:
“For many people filing an online self-assessment return is a straightforward process but if you are unsure about the information you are submitting seek the advice of a professional accountant. The cost of a professional accountant will be less than any accumulated fine from HMRC. Don’t be one of the almost a million people caught out each year.”
Don’t forget child benefit changes!
ACCA also point out that you need to be extra aware of the deadline thanks to the changes to child benefit claims. If you or your partner earn between £50,000 and £60,000, you can choose to continue to receive child benefit, but you must complete a self-assessment form and repay a proportion of the benefit you have received, by way of a tax charge, at the end of the tax year:
“If you earn over £50,000 and continue to claim child benefit but do not complete a self-assessment form you could be liable, not only to repay part of all of the benefit claimed by way of a tax charge on the highest earner of the couple, but also interest and penalties on the tax unpaid, even if it is an innocent mistake.
Parents filling in self-assessment forms on Christmas Day does not sound very festive, but the fines for getting it in late or wrong can add up.”
Start now and avoid a tax fine
It pays to make sure you’re well-prepared for the self-assessment cut off date. If you do miss the 31 January deadline, you’ll be fined £100 – whether you owe any tax or not. From then on, your fine will increase by £10 day for the next 90 days.
So if you’re three months late in filing (even if you owe no tax) you’ll face a fine of £1,000 – a sobering thought as you welcome in the New Year!
Not sure whether you need to complete a tax return?
If you’re not certain whether or not you need to complete a tax return, you may find the answer here. You can also take the IR35 test to learn if HMRC really considers you to be self-employed, and find out how their new simplified system makes it easier to claim expenses.
If you rent a property and it makes a loss, don’t forget to tell HMRC about it – so you can carry your losses forward to offset against future profits.
And if you’re already despairing at your chaotic record keeping habits, read our three tips for better ones, and make next year’s tax return a little more pleasant!