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The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

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The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

by Ali at Taxfile.

For many self-employed UK taxpayers, the January Self-Assessment deadline looms like a tax-shaped storm cloud. But what if you could banish that pre-deadline panic and transform tax season into a breeze?

Psychology tells us that we are motivated when one set of thought processes outweighs the opposing ones, tipping the balance to make us act. With that in mind, here are 7 key things that may motivate you to act on your taxes sooner rather than later.

1. Knowledge is Power

Filing early gives you a clear picture of your tax bill. This allows you to budget effectively and avoid any nasty surprises come January. Knowing if you owe tax or are due a refund empowers you to make informed financial decisions.

2. Less Stress = Happier

If you owe tax, filing early lets you explore HMRC’s Budget Payment Plan. This lets you spread the cost of your tax bill over monthly or weekly instalments, making it much easier to manage.

3. Faster Refunds = Even Happier

If you’ve overpaid tax, filing early means a quicker turnaround on your refund. That extra cash can be a welcome boost for your finances.

4. Time is Money

January is a notoriously busy time for HMRC and accountants. Filing early ensures you avoid spending hours over the phone to HMRC, or your accountant having to contact HMRC on your behalf and spending over 45 minutes on hold.

5. Spot Errors, Fix them with Ease

Sometimes mistakes happen. Filing early gives you time to review your return and identify any errors. This allows you or your accountant to rectify them before the deadline, avoiding potential penalties.

6. Proof of Income, When You Need It Most

A completed Self-Assessment tax return can be used as proof of income when applying for a mortgage, loan, or certain benefits. Filing early ensures you have this documentation known as an SA302 readily available.

7. More Time for Tax Efficiency (if Needed)

If your tax bill is higher than expected, filing early gives you more time to explore tax-saving opportunities with an accountant (if necessary). In our experience, it also allows us to keep an eye on your turnover and spot early if you might need to be VAT registered, or are steadily moving towards it. It could also allow us to advise whether you’d benefit from setting up a limited company.

File Early — and catch the worm!

By taking charge of your Self-Assessment early, you gain control of your finances and avoid unnecessary stress. So, ditch the last-minute panic and embrace the benefits of early filing.

Contact Taxfile & Take Control

At Taxfile we would like to instil healthy habits in our clients and encourage you to come and see us in the early months after April. By doing so, we can file your tax return early and remove all the stress and worry.

Get ready by making an appointment to see our tax agents today. Call, message, or use our online booking system:

020 8761 8000 Book Appointment Contact Us

Taxfile are tax advisors & accountants in Tulse Hill, Dulwich, South London & the South West of England.

Do I Need to Register for Self-Assessment?

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Do I Need to Register for Self-Assessment?

by Mohamed at Taxfile.

In today’s guide, we look at the rules around whether or not you need to register for Self-Assessment and submit a tax return to HMRC each year. Let’s take a look.

Reasons to Register for Self-Assessment

You generally need to register for a Self-Assessment tax return if your income isn’t taxed at the source, meaning the tax isn’t automatically deducted from your wages/salary. Here are some common scenarios where you would need to register for self-assessment:

  • You are self-employed — sole traders, freelancers, and consultants typically fall under this category.
  • You receive rental income — if you earn income from renting out a property, you need to register.
  • You have a high income — employees earning over £100,000 per year need to register as their tax calculations may become more complex. (From 2023-24 you are only required to register if your income is above £150,000).
  • You have other income sources — this includes income from abroad, dividends, and partnership profits.

If you are still unsure about registration, please contact HMRC or call Taxfile on 0208 761 8000.

Registering for UK Taxes is Important

Registering for UK taxes is important for a few reasons, as we’ll explain below.

Firstly, it helps you avoid penalties. If you don’t register for Self-Assessment when required, you could face penalties from HMRC. These can be significant, especially if you’ve been earning income for a while without registering.

Secondly, it helps to ensure accurate tax payments. By registering and filing a Self-Assessment tax return, you ensure you’re paying the correct amount of tax. Without it, you might underpay and owe interest, or overpay and have to wait for a refund.

Thirdly, it helps you stay legally compliant. In severe cases, failing to register and pay your taxes can lead to legal action, including prosecution.

Registering also helps you maintain good standing with the Government. Being registered with HMRC shows you’re taking your tax obligations seriously. This can also be important if you’re applying for credit, a mortgage, or a visa.

Do Directors Need to Do a Self-Assessment?

Not all directors need to do a Self-Assessment tax return, but some do. Here’s a breakdown:

Directors with only PAYE income

If your only income from the company is through PAYE (Pay as You Earn), where tax is deducted at source, you generally don’t need to do a Self-Assessment.

Directors with additional income

If you have any other taxable income besides your salary, like dividends, company benefits, or income from another job, you likely do need to do a Self-Assessment tax return in order to report it.

However, even if you aren’t required to register, HMRC might still ask you to file a Self-Assessment return.

Learn more about director self-assessment here.

Why is Payroll Important for a Director?

Payroll ensures compliance with tax regulations. Directors are considered employees for tax purposes, and PAYE is the system used to collect Income Tax and National Insurance Contributions (NICs) from their salary. Running payroll ensures these deductions are made and reported correctly to HMRC.

Payroll creates a clear and accurate record of your director’s salary payments. This is important for tax purposes, but also for things like calculating benefits and pension contributions that might be tied to salary.

Being on payroll allows directors to qualify for certain benefits they wouldn’t get if paid through dividends alone. These can include enrolling in a company pension scheme and accruing National Insurance credits that contribute to your state pension.

Payroll ensures transparency by helping to maintain a clear separation between personal finances and the company’s finances. This is important for legal and accounting reasons.

While there might be tax advantages to structuring some of your director’s income as dividends, payroll remains a vital part of ensuring you’re following regulations and have a clear record of your director’s overall compensation.

Learn more about how to pay yourself as a director here.

Information You Need to Supply for Professional Help with Your Tax Return

Information You Need to Supply for Professional Help with Your Tax Return

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Information You Need to Supply for Professional Help with Your Tax Return

If you’re self-employed in the UK, you need to file a self-assessment tax return each year. It’s not only the self-employed, though. If you are on a higher income* or receive untaxed income from property rental, savings, investments, or dividends, you also have to submit a return. Getting all the fields filled in properly and the figures right can sometimes be difficult, though. That’s where professional help will be worth its weight in gold. But what information will your accountant or tax advisor need from you? That’s what today’s post is all about, and we’ll explain exactly what information you’ll need to supply.

* (Those earning more than £100,000 currently, or over £150,000 from next year). Read more