The message is simple, don’t panic! Here is some sage and timely tax return advice from Lee Murphy, accountant and founder of Pandle, to save you now and better prepare you for next year
The income tax return deadline looms at the end of the month (January 31) and, if you are one of the many people who leaves it till the last minute, you only have a few weeks left to submit – or face a fine. The medical world is notoriously busy and it’s easy to get caught up; this article is here to help you now and prepare you for a less stressful submission next time.
So, if you are yet to complete your tax return for the financial year ending April 2017 this is a subtle reminder that you must do it now! Remember that this is also the tax payment due date and you may need time to get some funds together.
Payments on account
For practice owners, if it is your practice’s first year or your profits have increased, chances are you will need to pay more than expected using the ‘Payments on Account’ system that HMRC has in place. This means you will have to make two payments towards your next tax bill: the first instalment is due on January 31 and the second on July 31; the same also applies if you are self-employed.
Organise your paperwork
Make sure to have all your necessary paperwork together before sitting down to start the online process. This includes details of your earnings from your practice, your P60 (which has details of expenses) as well as any Gift Aid and pension payments you may have made.
It’s important to have the details of any other sources of income you might have, such as rental income from other properties you own, interest and dividends from investments and shares, savings and any royalties. Organising your paperwork first will reduce the pain and the chance of mistakes.
Consider using accounting software
If you are a self-employed and working on a freelance or locum basis you may well have lots of expenses to consider and income from several businesses. If you have yet to organise this, there is still time!
If you have left it this late, consider using book-keeping software to speed the process up. With functions such as automatic bank feeds, transactions can be checked and categorised quickly, meaning you have more chance of making the deadline. By nature, book-keeping software will reduce the scope for error which means you pay the right amount of tax and reduce the risk of an HMRC investigation. There are good free and paid-for versions available online.
Once you have the previous tax year complete, continue the book-keeping on a much more regular basis. Doing this helps you see how much money you are making and how much tax you are going to owe – in real-time – which can help you save for it.
Consequences and difficulties of filing late
Failing to meet the deadline bears an immediate penalty of £100 – which increases over time the longer you leave it – an unnecessary loss when you can easily avoid it by tackling the submission now. Don’t be like one of 840,000 people last year who failed to submit by the end of January! Also be aware that, as the deadline approaches, the HMRC system becomes much slower due to the volume of users…so beat the rush and get started now!
For the next financial year, you can submit from April 6, 2018, so be organised and make a note in your diary now to get your details submitted earlier. Make sure to select a quiet period and submit before the Christmas holidays in future, as rushing to complete a tax return in January is one bit of stress we can all do without!