Navigating Self-Assessment and Tax Returns: A Guide for Small Business Owners

Running a small business comes with its own set of challenges and for many, the prospect of dealing with taxes may not be the most thrilling aspect of entrepreneurship. However, it is an essential part of the job and with the online Self-Assessment deadline taking place on January 31, it’s crucial for business owners to get ahead of the game.

Emphasising the importance of early preparation Sinead Campbell, Head of Money, Debt and Quality at Advice NI explains “You don’t need to wait until January to file your online Self-Assessment tax return and there are several benefits to applying early. As a business owner you’ll get to see exactly what you owe and have more time to factor this into your 2024 budget, reducing the stress around Self-Assessment.

Below are top tips from Advice NI to help business owners get to grips with tax returns and avoid late-fee penalties.

Understanding Self-Assessment

“Self-Assessment is a method of paying income tax to HMRC, primarily applicable to the self-employed. However, individuals and businesses with additional income, such as COVID-19 grants and support payments may also need to submit a self-assessment tax return, says Sinead.

“It’s important to note that you must send a return if HMRC requests it, and failing to do so on time can result in interest and penalties. You have the option to submit a self-assessment by paper or online and upon filing, you’ll receive a bill that includes the tax owed for the last tax year, known as a ‘balancing payment.’ If this amount exceeds £1,000 an additional payment towards the next year’s bill termed a ‘payment on account,’ will also be included.”

Know the Key Dates

Sinead continues, “In addition to the online January deadline, several key dates should be on the radar of business owners. The first is April 6, the first day of the new tax year and when new tax rates or allowances are announced. Another crucial date to remember is July 31 as this is when the second payment on account is due for self-employed workers paying tax through this method.

“If you’ve never submitted a Self-Assessment tax return, you’ll need to register by October 5 for the following tax year, and if you wish to file a paper tax return the deadline is October 31. It is important not to submit your tax return late as this could result in a fee. If you have missed the paper deadline, you can opt to submit it online by January 31”.

Use the Self-Assessment Guide

HMRC has revamped its Self-Assessment guide, offering valuable information on completing tax returns, explains Sinead.

She says, “The guide covers available help and support, necessary documents, declaration of earnings, including COVID support funds, assistance with paying tax bills, and refund procedures. Additionally, an online tool is available to check if a Self-Assessment tax return is required. There are a number of benefits to submitting online, including HMRC’s digital assistant, free webinars and videos about Self-Assessment. “

Apply Early

“Submitting your Self-Assessment tax return early can allow individuals and business to plan ahead and budget,” explains Sinead.

She continues “For example you can find out what you owe for the previous tax year as soon as you have filed, allowing for more accurate financial planning. There’s also the option to spread the cost of your tax bill with weekly or monthly payments using HMRC’s Budget Payment Plan.”

What to Do If You Can’t Pay

If you find yourself unable to pay your tax bill in full by the January 31 deadline, don’t panic says Sinead. “HMRC offer guidance and information to assist with filing returns and managing payments including setting up a ‘Time to Pay’ plan, allowing you to pay the owed amount in instalments. You can contact HMRC as soon as possible if you’ve missed a tax deadline or anticipate difficulty in meeting the payment deadline.

“Whilst tax season may not be the highlight of your year, being well-prepared and informed can significantly ease the process. Remember, if you need help with your self-assessment get in touch with Advice NI’s business debt or HMRC advisers on 0800 915 4604.”

Advice NI and the Independent Advice Network is made up of 64 members and more than 300 advisers across Northern Ireland, all providing free, impartial, and confidential advice. For business debt advice to support with your self-assessment call the freephone number on 0800 915 4604 or email [email protected] where they can speak directly with an adviser between 9am and 5pm, Monday to Friday. You can also access downloadable self-help on Advice’s NI website and its live webchat is also open 9am-1pm Monday to Friday.

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