Double tax bill this January for three million of the UKs self employed
- Sole traders still due to pay their deferred 2019/2020 Self Assessment return face a double bill this month
- A quarter (26%) say it will be harder to pay their tax due to the economic impact of COVID-19
- Two in five (42%) have been fined previously for making mistakes or missing the deadline – and 21% are less confident in completing their return accurately this year
- Self Assessment process is associated with dread, annoyance and stress: but mindfulness techniques could transform this in 2021 as QuickBooks and Self Space launch new mindfulness Self Assessment guide
New research from Intuit QuickBooks reveals that a quarter (25%) of the UK’s self-employed – or three million people – could be facing a double tax bill this January. With less than two weeks until the Self Assessment tax deadline (31st January), those who deferred their 2019/2020 payments due to the coronavirus will owe double this month.
And it’s not just those who deferred last year’s payments who could face difficulty. 12.1 million people in the UK are expected to file a Self Assessment return this year, but thanks to the impact of the coronavirus, this year’s return could be the most challenging yet.
Over a quarter of sole traders (26%) say they will find it harder to pay their tax bill this year due to the financial impact of the pandemic. Meanwhile, a fifth (21%) say they are less confident in completing their return accurately because of the inclusion of COVID-19 grants.
As a result, HMRC is being more lenient towards late submissions this year. Whilst they are still encouraging as many people to file on time as possible, if an applicant has been adversely impacted by COVID-19 they will accept that as a “reasonable excuse” for penalties to be waived, though penalties for paying tax late will broadly still apply.
In normal times, as many as two in five (42%) sole traders say they have been fined for making mistakes or missing deadlines – paying an average total of £389 in penalties. It is perhaps unsurprising then that the two emotions most commonly associated with completing a Self Assessment tax return are stress (31%) and dread (18%).
However, Self Assessment doesn’t have to be a negative experience: one in five (20%) sole traders view the completion of their tax return as an opportunity to reflect on their achievements throughout the year.
QuickBooks has partnered with online therapy platform Self Space to encourage more sole traders to do the same. Launched today, QuickBooks and Self Space have created the world’s first how-to-guide on filing your taxes mindfully. It includes ten handy tips on how to take the stress out of your tax returns and use the process as a way of reflecting on your progress and achievements.
Jodie Cariss, founder of contemporary mental health service, Self Space: “For millions of us in the UK, filling in our Self Assessment tax return brings about an annual dose of dread and overwhelm, and this year, it is even more complicated. The pressure that comes with financial stress can be destabilising – but it doesn’t have to be.
“Where possible, sole traders should try and look beyond the numbers – notice the names of people and projects on invoices – and celebrate the triumphs, no matter how small. By approaching our tax return mindfully, we can make the process easier on ourselves.”
Since lockdown QuickBooks has been providing practical tips and guidance on running a small business through its Ask the Expert series. TV presenter and author Fearne Cotton, will be hosting a webinar on 22nd January to share tips on how she manages the stresses of running a business.
Pauline Green, head of product compliance at Intuit QuickBooks commented: “Sole traders and self-employed individuals have never faced such challenging circumstances and with other areas requiring focus, the burden of admin can be an unnecessary drain on time and resources.
“Today’s findings reveal that less than a third of sole traders are confident they know where they’ve kept their records. Using the right digital tools not only keeps track of financial information, but also gives business owners the confidence they’re filing their tax accurately. Speeding up this process means the self-employed have time to focus on what really matters: running and growing their business.”
According to the research nearly two in five (42%) sole traders misjudge the amount of tax they’re due to pay, with a fifth (21%) underestimating the final amount – meaning many are faced with a nasty surprise. QuickBooks Online uses financial information already uploaded to track income tax and National Insurance contributions in real-time, providing an estimate of the amount owed and creating an efficient and stress-free way of completing tax returns.
I look at my HMRC account home page weekly, which is supposed to tell me how much I have to pay by the end of January. I paid the amount stated last week, but now a new higher amount has appeared, which I have to pay by the end of January. There is a webchat line, but that kind of thing is only appropriate for a small audience, not all the taxpayers in the kingdom. For it to work, it would need thousands of advisors which I am sure it does not have.