Blazing sun, drinks in the garden and not being able to get to sleep due to muggy, humid night-time heat that keeps most people awake. This year’s summer hasn’t been so bad, but we’re fast approaching the cold, rain-soaked and windy days of the end of the year (in the famous words of a popular TV program…winter is coming).
That also brings excitement with it too – possibility of snow days (worshipped by teachers mainly), the buzz and excitement of Christmas and the festive holidays to spend with your family and friends. Unfortunately for quite a few of you, it may also mean you start to think about the potential headache coming your way.
Self-assessment tax returns.
With the Government bringing out further legislation and initiatives that increase the burden on contractors who have a limited company, there’s even more ways to find yourself in a pickle (and we’re not talking about the cranberry type) in the new year.
Here’s a few handy tips to make sure you’re on top of it so you can sit back and enjoy the festive fun (which tends to be eating far too much and falling asleep on the couch for us at Appytech).
Thou Shalt…Register?If you have an accountant, they will have likely done this for you. Otherwise take a look at the HMRC website to get an idea of how to do this.
When you have registered, they’ll provide you with a Unique Taxpayer Reference (UTR in abbreviation world) which you should keep somewhere safe and secure. From there you’ll end up getting a letter from the HMRC, typically in April or May, as well as seeing the HMRC’s cartoon character with a moustache and bowler hat everywhere on TV (who looks a lot like a character from TinTin).
If you don’t get a letter through the post, don’t assume you don’t have to do it! We know what the post can be like sometimes but know that it’s still your responsibility to complete your return every year.
Most people tend to submit their return online, which is set to increase as the Government launch their ‘Making Tax Digital’ initiative (complete with fines if you don’t as well). Take the time to understand exactly what this means, what you have to do and the penalties if you don’t.
Breathe…time for the self-assessment itselfDepending on your setup and your financial situation, the self-assessment can either seem like a walk in the park, or attempting to decipher hieroglyphics. There are quite a few areas you’ll need to address such as any supplementary income, investments, income from property and child benefit income. If you’re doing this online, the HMRC site calculates automatically what you owe. If you do it via paper submission, you’ll tend to get a calculation through the post. If you’re lucky enough to have an accountant, they take on the legwork and typically provide you with a tax calculation and submit on your behalf. Just be wary that some contractor accountants may charge for this.
Remember the dateAlong with family birthdays and anniversaries, the next important date to remember is 31st January. That’s the date you need to submit your tax return online. This means funds cleared and deposited BY that date, not on that date.
The long arm of the HMRCIf you miss the deadline for whatever reason, it’s an instant £100 penalty. For every day after that it accrues to £10 per day, until you reach 90 days. Further penalties get added after 6 and 12 months (you get the picture).
These may increase depending on whether the HMRC adds penalties to their ‘Making Tax digital’ push, as you will be solely responsible for keeping your profile and online account at least every three months, according to the HMRC (as well as providing in-year data).
The weighing down of being LimitedThere’s positive and negative points of having a limited company (take a look at our Mutual Umbrella vs Limited article to see who wins) but what most contractors tend to forget is how time-consuming having a limited company can be. With that set to increase by the HMRC bringing out more rules, regulations and procedures, many contractors will start to feel that it’s not just their money that’s being taken.
Being with Appytech actually takes these problems and issues away. We handle your pay, take care of your taxes and provide sound, professional advice on anything you might have questions on (including what to have for lunch).
Why not fill in a pay illustration and see if it matches or is better than your limited rate? You may just be surprised how much you end up in your pocket (minus the headaches and hassle).