Filing tax is always something that strikes fear into the self-employed and small businesses. People tend to look at it as something incredibly complex that they’ll never have any chance of completing correctly. Most of the fear over tax is psychological and purported by wild stereotypes that aren’t true. The fact of the matter is filing taxes in the UK couldn’t be simpler.
Let’s take a look at some top tips for filing taxes in the simplest way possible in the UK.
Prepare in Advance
The best way to stop the mad dash during tax season is to prepare yourself in advance. A lot of first timers will make the fatal error of assuming they can complete the process in a few hours. No, this couldn’t be further from the truth. Most people will assume wrongly and get stung by a £100 fine for missing the deadline.
The most time consuming part of the process is registering with HMRC and receiving your Unique Taxpayer Reference (UTR) for the first time. This has to come through the post, so you could have to wait up to a week to proceed, assuming nothing goes wrong.
Ask Questions Early
Most of us would only ask help as and when we encounter problems. Never do this when filing taxes in the UK. Usually, you’ll find it impossible to get in touch with HMRC during tax season. The phone lines are nearly always clogged up, so unless you want to spend the entire day trying to ask a simple question start thinking about potential issues months in advance.
Take note, a lot of common questions are answered directly on the HMRC website. Leave the helplines for personalised enquiries.
Keep Accurate Tax Records throughout the Day
The average taxpayer will make the job even more difficult by making sure they throw all the invoices and all the receipts into a box. When the time comes to file their tax, they will have to go through all these documents to discover how much they owe. Rather than going through this ritual every year, get into the habit of working out your incomings and outgoings on a regular basis.
For example, a small business may choose to setup a spreadsheet of their income each week. They can add this to an overall total. By the end of the year, they already have a running total of their finances, so all they have to do is transpose the figures to the actual return. This is a job that can take as little as ten minutes.
Outsource the Problem
Nobody enjoys paying tax. It takes a lot of time and a lot of hassle. If you find this problem is getting the better of you, don’t let it take over every aspect of your life. Prevent any fines and prevent any sleepless nights by hiring an accountant.
A good accountant can become the most valuable person in your life. Call them and they will guide you through what they need to file your return on your behalf. You’ll have a deadline and they’ll keep you updated on how they’re doing.
Furthermore, if you have a rather complicated tax situation, an accountant can decode it and translate it in a way you can understand. They can also reduce your tax bill, in many situations.
But, overall, the key to simplifying taxes is to not leave it to the last minute. It doesn’t matter how busy you are. Aim to start thinking about your tax situation three to six months in advance. You’ll find it a bother in the short-term, but when January hits you’ll be thanking your lucky stars.