Mike Parkes, Technical Director at GoSimpleTax, has some top tops for electricians.
It’s a fixed date in the diary of every self-employed electrician. 31st January: the self-assessment tax return deadline.
This year, more than most, electricians will be feeling pressure to submit their tax return on time and ensure their bill is paid, following a difficult year that has impacted on every trade.
Unlike previous years, there are a number of important things to remember, as a result of COVID-19.
– Financial support, such as the Self-Employment Income Support Scheme (SEISS) and Small Business Grant Fund (SBGF), must be included in a self-assessment tax return, as they’re subject to Income Tax and Self-Employed National Insurance. However, this applies to next year’s 2020/21 return. A recent survey carried out by GoSimpleTax found that 46% of sole traders thought they wouldn’t have to include coronavirus-related grants in any tax returns.
– HMRC has announced that it will allow people to appeal against a financial penalty, if they file a late tax return due to coronavirus-related issues. It’s important to note that people will still be fined for filing late returns, but will now have an opportunity to appeal if they have a ‘reasonable excuse’. As always, the message is still very much to submit your tax return on time by 31st January deadline.
– If you cannot pay your self-assessment tax bill, you might be able to set up a Time to Pay Arrangement with HMRC. This lets you spread the cost of your tax bill by paying what you owe through affordable monthly payments based on your income and expenditure.
While COVID-19 is affecting the majority of self-employed electricians, due to a fall in revenue and restricted trade, there are a number of key things that will make submitting your tax return easier at the end of this month.
– Think about it in six parts: do I need to submit a self-assessment? When do I need to fill it in by? When and how do I register? What sections apply to me? What expenses can I claim on? And, finally – the most important part – how do I pay my final tax bill? Address each one of these carefully and in plenty of time and the deadline will come and go pain-free.
– It’s important that you keep all relevant documentation, so you can provide the most accurate information about untaxed income and expenses relating to those earnings. These include expenses records, benefits, bank statements, property income, Capital Gains and P60/P45/P11D.
– Numbers, numbers, numbers – it’s so easy to get one wrong when you’re surrounded by so many, but never guess; all calculations have to be exact, so be armed with a calculator as mistakes can be costly.
– The return is used for calculating Class 2 and 4 national insurance, as well as income. You may be reminded to pay class 2 national insurance, which even if you’re not required to do so, it’s worth considering voluntary payments to protect your state pension and other statutory benefits.
– Under the current system, HMRC will allow you to submit your tax return and then make a resubmission before the next filing deadline of the year after. So, if you make a mistake, don’t panic. Although careless and deliberate errors can be penalised, HMRC will recalculate the tax you owe.
Tax can cause stress when juggling so many different elements of your business and working for yourself. The key is to make the self-assessment process as simple as possible.
Find out more about GoSimpleTax Invoicing, which allows users to create, issue and manage invoices, as well as expenses, by clicking here