Safety Stock Calculator & Formula
FINANCE, BUDGETS AND CASHFLOW
Time spent on tax returns threatens financial fitness for sole traders
As we approach the end of January 2022, many of the nation’s self-employed will be thinking about new goals and ambitions for their business.
For sole traders in particular, our latest research shows getting financially fitter is a key ambition, with four in five agreeing they want to get their finances into shape.
However, the Self Assessment deadline is looming – and we’ve found that time spent on tax returns is preventing many sole traders from meeting their goals.
HMRC has suspended the automatic penalties for self assessment; sole traders will now not incur the late filing penalty as long as they submit their return before 28th February. However, interest is still charged on late payments from 1st February, meaning it is in the sole traders’ best interests to meet the original deadline.
The Self Assessment process can be time consuming. Our research shows the average sole trader spends 16 hours completing their tax return. Many admit that it takes longer than it should, either due to putting it off, a lack of confidence or simply not understanding how to get it done.
This time spent on tax returns is eating into sole traders’ ability to meet their goals, and a lack of time is one of the main reasons that the overwhelming majority (83%) of sole traders give up on their resolutions.
Tips to streamline the Self Assessment process
But tax doesn’t have to be taxing – and help is at hand. We’ve teamed up with broadcaster and former rugby player Ugo Monye to produce a simple step-by-step guide to Self Assessment, helping sole traders improve the health of their finances.
Ugo’s guide to getting financially fitter for Self Assessment:
Gather all your tax return information including receipts, purchases, statements and invoices
Register for Self Assessment on the HMRC website (link to our dedicated HMRC page at the end of this article)
Check your details and fill in all the sections that apply to you
Report what you’ve earned
Add your tax-deductible expenses
Double check your return to ensure you don’t end up paying too much
Ugo also recommended using accounting software to streamline the process:
“This time of year, many of us are focusing on our New Year’s fitness resolutions. But with the Self Assessment tax return deadline looming, many sole traders will be feeling the strain and struggling to set aside the time to do it all. Using accounting software streamlines the process into simple steps, taking the stress out of tax – so there’s more ‘you time’ to rebalance your body and mind.”
Check out Ugo’s Guide to Self Assessment video here.
Simplifying tax returns means resolutions are more likely to succeed
The benefits of spending less time managing taxes extends long after the Self Assessment deadline has passed. With more time to themselves, sole traders can think about not only their financial ambitions, but health and wellbeing goals too - 90% of the sole traders we surveyed also have fitness resolutions like exercising more or eating more healthily.
Pauline Green, our Head of Product Compliance and Programs added:
“Tax returns don’t need to be taxing. HMRC has given many sole traders a welcome break from late penalties, and more help is at hand. Digital software provides additional support by automating the Self Assessment tax return process, giving sole traders back valuable time which can be much better spent on improving financial fitness or overall health and wellbeing. Financial management platforms also provide quick and easy access to the insights sole traders need to improve their finances – setting them up for the best possible success.”
Learn more about how we make HMRC Self-Assessment easy.
1Survey carried out by Censuswide amongst 1,001 respondents who are self-employed and need to fill out a self assessment return in the UK. Responses were collected in January 2022 via Censuswide’s audience pools and partner network, using double opt-ins and random device engagement sampling methodology to ensure accurate targeting.
2If you are unable to pay by the 31st January you have until 1 April to pay or sole traders can set up a Time to Pay arrangement.
Feel you’re better informed about self assessment tax returns? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.