PMQs: Johnson hits back at Starmer over Tory tax increases
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With the arrival of the new tax year comes a host of changes that will affect how those who are self-employed or freelance complete their tax returns. Many of these rules were announced by Chancellor Rishi Sunak during his Spring Statement to help alleviate some of the pressure brought on Britons by the cost of living crisis.
Getting organised and staying on top of your tax returns can seem like a daunting task without the right knowledge or advice.
The Covid pandemic has had a significant impact on the number of self-employed workers in the UK.
In fact, according to data from the trade body, Ipse, the number of self-employed Britons fell to around 4.1 million, by the end of 2021, from a peak of five million before the pandemic.
So, with the new tax year upon us, GoSimpleTax has given Express.co.uk a tip for each of the next 12 months to help individuals stay on top of their finances.
As the first fiscal month, it’s vital businesses establish solid foundations for themselves.
All VAT-registered firms – even those below the threshold – should be aware they will need to adopt ‘Making Tax Digital’ requirements, ensuring their income and expenditure is tracked digitally throughout the year.
You should also have a look to see what your tax rates are for 2022/23. Once you know this you can budget accurately for your tax bill.
In May, make sure you do your 2021/22 tax return as soon as possible after April 6.
Millions leave this task until January, but knowing what you owe will allow you to budget and plan for the year ahead.
Take time to make sure you are tracking and accounting for all your income. For example, this could include profits from cryptocurrency trading, eBay sales and so on.
Your side hustle counts as income just as your normal earnings do, so make sure this is tracked throughout the year.
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Some workers could make the argument that they don’t have enough time to know their finances inside out.
But Mike Parkes, a tax expert with the firm, said “practising good financial habits is easy once you get into a routine”.
He added: “It’s an important part of running a business and self-employed people need to make it a priority.
“By setting some time aside at a regular time each month to sort your invoicing, track your expenditure and reconcile your bank transactions, you can make good financial habits a reality.”
For July, don’t forget your payment on account which will be due this month. As the part-year payment towards your next tax bill it’s calculated when you do your tax return.
The arrival of August provides everyone with a good opportunity to make sure you’re claiming all your business expenses.
If you haven’t already, consider upping your prices to allow for the increased cost of doing business.
Though it can result in some uncomfortable conversations you will likely find that most people understand your need to grow prices.
Start to prepare for Making Tax Digital for income, which at this point will be only 18 months away.
Freelancers and the self-employed will need to use an approved software to track their income and expenditure in real time.
So, if you don’t already use a programme to do this now is as good a time as any to start.
As we close in on the end of 2022, consider pensions and investments to secure your long-term financial future and make the most of tax free allowances.
Self-employed people don’t benefit from employer contributions and nor are they auto-enrolled in a programme.
The self-assessment deadline will be creeping up – it’s at the end of January – and every year there is a rush of last-minute submissions in the hours before the midnight limit.
If you haven’t already done your return make sure you get everything sorted.
The self-assessment deadline is January 31, 2023, and for the past couple of years, it’s been extended by a month.
But this is unlikely to happen again, so don’t rely on an extension.
If you have missed the self-assessment deadline, you’ll have an automatic penalty of £100 and you need to act now to avoid larger penalties.
Anyone with a valid excuse such as a computer malfunction or issues with HMRC’s service should lodge an appeal without delay.
Start to prepare your end-of-year accounts so that this job is less time-consuming in April.
You can then use this month to review your accountancy software and reconcile any erroneous transactions.
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