Small business owners set for a taxing Christmas

Despite the Self Assessment tax deadline being a full 38 days away from Christmas Day, record numbers of people are choosing to spend the holiday filing their tax returns online with HM Revenue & Customs (HMRC).

taxing ChristmasThe figures for a taxing Christmas for business owners include:

  • 2,590 business owners submitted Self Assessment tax returns to HMRC on Christmas Day last year – up from 1,944 in 2016.
  • Numbers of business owners submitting self assessment tax returns increased in 2017:
    • 2014: 1,773 submissions were made.
    • 2015: 2,044 submissions were made.
    • 2016: 1,944 submissions were made.
    • 2017: 2,590 submissions were made.
  • 7,655 business owners ignored the Boxing Day sales and instead chose to complete their Self Assessment tax returns, which is increase of 1,500 people compared with last year.
  • Over 6,000 business owners spent Christmas Eve filing their tax returns, with 92 of them filed between 11pm and midnight.

If you miss the 31st January deadline, HMRC will automatically issue you a £100 penalty, and will charge interest on any unpaid tax. You may also be able to ask HMRC to waive your penalty, if you have what they consider a “reasonable excuse” for not filing your return. If you meet the criteria, you can file a claim form.

Ed Molyneux, CEO and co-founder of FreeAgent, who provide award-winning online accounting software to freelancers, micro-businesses and their accountants, said:

“Instead of indulging in the Christmas festivities, increasing numbers of people in Britain are celebrating the festive season by choosing to file their dreaded tax returns.

“Christmas is often a busy time for business owners, who have to juggle their business responsibilities alongside social commitments. As we get caught up in the seasonal festivities it’s easy to see how completing your tax return can get pushed to the bottom of the to-do list, but the 31 January deadline comes around quicker than you think.”

“The real benefit of filing a Self Assessment tax return over the festive season is that business owners can have complete peace of mind for the new year and actually look forward to January, instead of scrambling at the last minute to meet the tax deadline at the end of the month. In addition to this, they can also spend more time concentrating on other parts of their businesses, which will leave them in a much better position for the rest of the next year.”

Emily Coltman FCA, chief accountant from FreeAgent, also provides the following tips for those will be submitting their returns online over Christmas:

  1. Register – and use the right numbers

You can’t actually submit your tax return online without being registered with HMRC first. If you haven’t already gone through this process, you need to do so and it can take a few weeks for your activation PIN to arrive through the post, and HMRC won’t give you the information over the phone.

  1. Collect all your information

Before you can file your tax return, you’ll need to collect all of the necessary information that you have to include in it. As a basic rule, this will be any money you’ve received or earned from pretty much anywhere – including wages from a job, income from a trust, interest from your bank account (except an ISA) and profits from operating a sole trader or a partnership.

  1. Follow the rules

There are many rules and regulations when it comes to tax, so make sure you follow these to the letter when completing your tax return. You can find this information on HMRC’s website or you can ask a professional accountant or tax advisor to explain the relevant points for your business.