We’ve had a couple of months to catch our collective breath since the frenetic 31st January self-assessment deadline, but it’s just one of many.
As one tax year ends, so another begins
The tax year consists of numerous deadlines that differ for business and personal clients. The self-assessment ultimate deadline of 31st January is common to all and is the one that creates the most work for accountants, HMRC and for individuals and business clients alike. Dealing with it takes up vast national resources.
Economists and business leaders are concerned about the UK’s diminishing levels of productivity. As a tax-paying nation, we need to get our business and personal financial affairs well organised, adopt a ‘right first time’ attitude, and wean ourselves off going to the wire with deadlines!
Accountants patiently explain the necessities to clients and HMRC spends vast amounts of time and taxes on educational resources, online guides and the hotline. However, 31st January continues to be a huge blockage, very stressful and results in many millions being paid in late payment fees, unnecessarily. https://www.gov.uk/self-assessment-tax-returns
Win: win
Rackham’s conducts a full review every year of the self-assessment season (when our calculators have cooled down). This helps identify the need for any education, information or new processes that will help our clients to prepare for the next one.
Rackham’s Principal, Trevor Rackham, gives his insights into this year’s round of returns and shares useful knowledge and reminders for preparing for the next one…
The things most often missed off tax returns:
1. Taxed income.
2. Foreign income.
3. Dividend income below zero band.
4. Rental income, even when in a loss position.
Also:
5. 31st January is only the ultimate deadline for the past tax year. You can submit from the end of the old tax year onwards for the current year.
Plus, make sure you provide your accountant with:
6. All expenses in relation to trade/ property/ employment.
7. CIS certificates. The total amount of CIS deducted needs to go on the tax return.
The things most often recorded incorrectly on tax returns:
1. Rental income must be gross of agent commission.
2. CIS income must be grossed up.
3. Some clients omit to give us all their business expenses.
4. Some clients try to get away with expenses of a private nature.
5. Dividends are recorded on the profit and loss account in the client’s company accounts.
The things business owners can do to make self-assessment far less burdensome
- Have a process for recording incomings and outgoings, use an app or basic accounting software to make it easier and save the information, including receipts, as you go along.
- Make bookkeeping a daily priority. Ten minutes a day can make all the difference. See our blog for ten-minute bookkeeping tips. https://www.rackhamsaccountants.co.uk/2022/03/31/protect-your-cashflow-in-10-minutes/
- Act on letters, emails and notifications from financial organisations and the tax authorities straight away, even if that simply means passing it over to your accountant.
- Wean yourself off deadlines – especially the January 31st self-assessment. Self-assessment tax returns can be completed and submitted once the end of the tax year being assessed has ended and with an ultimate deadline of the following January 31st.
- Know the tax rules that relate to your financial situation, particularly if you run a business and have any form of rental or foreign income. HMRC has user-friendly guides, worksheets, ready reckoners and a free telephone hotline! Even if you have a professional, reliable and competent accountant, it always pays to hold a little knowledge so you can do your bit and have the correct information ready!
Following these simple points will help both business and private individuals save time, cost and a great deal of stress regarding their self-assessment tax return.
That has to be good news for everyone!
By the way, there are 300 days between the start of the new tax year and 31st January – just so you know…
We’re here to help with self-assessment tax returns, business accounts and personal tax matters. Call us to arrange a free consultation on 01482 631700.
