Micro business owners pushed to register for self-assessment tax returns
Britain’s freelancers and micro business owners who havent yet registered with HMRC have been urged to do so to ensure their self-assessment tax returns are processedin time.
With just 14 days left until this year’s self-assessment deadline on 31 January, business leaders have warned the country’s smallest company owners that failing to register business names and submit tax returns on time will result in fines.
Micro owners and freelancers who fail to submit their self-assessment tax return before the 31 January will automatically be slapped with a 100 fine.
In order to complete self-assessment returns online, micro business owners must include a unique activation code, which HMRC sends out via post once an owner has registered their firm.
Since post can often take days to arrive, chief accountant at online small business accounting platform FreeAgent, Emily Coltman, advised micro owners to act quickly to guarantee fines would not be incurred.
it’s a relatively straightforward process [to register] but as you’re relying on snail mail to get your code, it can take a while to receive the information you need, and you simply cannot file your return without this, she explained.
if you leave it too late, you won’t get your code in time to be able to meet the 31 January deadline.
The government doesnt accept failure to register in time as an acceptable excuse for filing a late self-assessment tax returns. Coltman highlighted that last year, HMRC collected 87m in fines from freelancers and micro firms across the country that left it too late.
She added: If you don’t pay your tax youll also face extra financial penalties which can quickly escalate. So it’s better to act quickly and register with HMRC now than risk leaving it until it’s too late.
Three other common mistakes freelancers and micro business owners make on their self-assessment tax returns
(1) Failing to declare all income
When filling out your tax return, you must remember to include all the income you’ve earned during the year not just what you’ve received via your main employment.
This includes any income that you had invoiced, or for which youd done the work, before 5 April 2016, but which your customers did not pay you for until after that date (unless you’re using the cash basis to prepare accounts).
It also includes any other source of income for example from another job, interest on a savings account or rent earned from property. You must have all of the relevant paperwork for this income (such as your forms P60 and P11D from your employer and your bank interest certificates) and remember that these will all have to relate to the tax year 2015/16.
Tax-free income such as interest earned on an ISA should not be included on your tax return.
(2) Leaving out other important information
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.
The Christmas holidays are fast approaching, which means that for many small business owners it's time to start thinking about their self-assessment tax return in preparation for the January rush. more»