Leading Wales-based accountancy and financial planning specialists Bevan Buckland LLP, is reminding self-employed people that they may be able to reduce their first tax return payment to HMRC if the pandemic has hit their earnings.
But, they warn, business-owners must plan for this immediately, so they don’t miss the 31 January deadline.
With just a few weeks until the self-assessment deadline for those filing online, several million self-employed people in the UK haven’t yet filed their tax return. Bevan Buckland LLP is reminding people that they face an initial £100 penalty if the return is late, and this fine could increase the longer it is left.
James Davies, Tax Consultant at Bevan Buckland LLP said: “Around 410,000 people in Wales have to complete a self-assessment tax return each year, with many leaving it until the last minute. Lockdown should result in some people having more time on their hands to complete their return sooner. Of course, many businesses and freelancers will have seen the pandemic dramatically impact their earnings since the new tax year started in April 2020. As a result they may be able to reduce their first payment on account this January to ease their personal cash flow position. This decision will require thought and planning so dealing with your tax return as soon as possible is critical to making sure you don’t pay more tax than you need to this month.
“When you’re self-employed, it’s up to you to let HMRC know your income for the year and pay any tax you owe, via a self-assessment tax return, and whilst this is the main reason people need to complete a tax return there are other criteria an individual might meet. You may need to submit a return for rental income, other untaxed income, income from savings and investments including dividends from shares. You might be asked to complete a return because you are a company director or because you have claimed child benefit.”
James adds: “Many businesses and self-employed people are finding lockdown is putting a strain on their operations, but one thing it has gifted some is extra time. We would urge people to use this time wisely by getting those tax returns competed.
“If this is your first time completing a self-assessment tax return, or if you didn’t file one in the previous year, you will have needed to register first. The registration deadline for returns relating to the 2019/20 tax year was 5 October 2020, so if you missed this deadline, or if you miss any of the others in the process, you must speak to an advisor as soon as possible.
“There’s an initial £100 penalty if your return is late and this is the case for up to three months, but this could increase the longer you leave it. If the thought of rummaging through old receipts and puzzling over tax calculations fills you with dread, a professional financial advisor can help. Don’t let common problems, like missing out on tax relief, not declaring all your income, and late or inaccurate filing get you in a mess.”
Bevan Buckland LLP is the largest independent accountancy firm in Wales, providing practical support and strategic accounting, tax and financial planning advice for small to medium sized businesses. Headquartered in Swansea, the firm has offices in Carmarthen, Pembroke Dock, Haverfordwest and St David’s.
For more information visit: www.bevanbuckland.co.uk
(Lead image: James Davies, Tax Consultant at Bevan Buckland LLP)