The FreeAgent Blog
Tuesday 31st January is upon us! If you’re a small business owner or freelancer who has to submit a tax return this year, you’ll know that this is the date by which you have to submit your Self Assessment for the 2015/16 tax year to HMRC. It’s also the date by which you have to pay your tax bill - so it’s important to get organised and make sure that your payment reaches HMRC before the midnight deadline.
If you’re getting a little anxious about whether you’ll be able to actually complete everything on time, don’t worry. The good news is that if you've registered your business for Self Assessment then there’s still time to get your tax return in order and submitted to HMRC. This means you'll (hopefully) avoid incurring a fine of at least £100. Here’s some useful information if you still haven’t filed your return:
Act quickly - but be pragmatic
Let’s start with the bad news. If you have still to register your business for Self Assessment, it’s highly unlikely at this late stage that you’ll be able to do so and receive your activation PIN and Unique Taxpayer Reference (UTR) - which HMRC sends to you by post - in time. So the fine of at least £100 is probably unavoidable at this stage.
However, you still need both your activation PIN and UTR to complete and submit your return, so make sure you proceed as normal once you receive them. Here’s what you need to do to get started on your tax return once you’ve got those numbers. The longer you leave it to file your return and pay your tax, the more penalties you can accumulate, so don’t delay any longer than you have to!
Know how long it will take your payment to reach HMRC
Here’s a handy rundown of the main payment options that HMRC accepts, how long each type of payment takes to process and how you can use each payment method.
|Payment type||How long it takes for the payment to reach HMRC||How you can pay|
|Online or telephone banking (Faster Payments)||Same or next day, including weekends and public holidays||By using the bank details listed on gov.uk|
|CHAPS||Usually the same working day (if you pay within your bank’s processing times)||By using the bank details listed on gov.uk|
|Bacs||Three working days||By using the bank details listed on gov.uk|
|Debit card||Three working days||By following the links from your HMRC online account.|
|Credit card (1.5% charge)||Three working days||By following the links from your HMRC online account.|
|Cheque through the post||Three working days||By writing a cheque made payable to ‘HM Revenue and Customs only’ followed by your Unique Taxpayer Reference (UTR) number. It should be posted along with your paying-in slip to HMRC, Direct, BX5 5BD – no street name, city name or PO Box is required.|
|Existing Direct Debit||Three working days||By setting up a Direct Debit from your HMRC online account. (Note that you have to set up a new direct debit every time you wish to make a payment).|
|New Direct Debit||Five working days||By setting up a Direct Debit from your HMRC online account.|
|At the Post Office (only an option if you get paper statements from HMRC and have a paying-in slip which they sent you).||Same day (Monday-Friday only)||By paying a maximum of £10,000 by debit card, cash or cheque made payable to ‘Post Office Ltd’.|
|At your bank or building society (only an option if you still get paper statements from HMRC and have the paying-in slip they sent to you in the post)||Same day (Monday-Friday only)||By paying cash or writing a cheque made payable to ‘HM Revenue and Customs only’ followed by your Unique Taxpayer Reference (UTR) followed by the letter ‘K’.|
Note: For payments where a reference is required you will need to use your 10-digit Unique Taxpayer Reference (UTR). Where a payment reference number is asked for you should use your UTR followed by the letter ‘K’.
As you can see, the majority of the payment methods only apply on banking days (i.e. Monday to Friday), and many of these methods take a few working days for your payment to reach HMRC.
Whichever method you plan to use to pay your tax bill this year, if you’re planning to meet the deadline then make sure you file your Self Assessment with HMRC in enough time to allow your payment to reach them before the 31st January. Otherwise you will have to pay interest and may even face a penalty, even if you manage to file your tax return on time.
Don’t panic - late filing isn’t the end of the world
If you find yourself struggling to complete your tax return on time, don’t do a poor, rushed job just to get it submitted. If you miss the deadline, the worst that can happen in the first instance is that HMRC will fine you £100 for failing to file on time and you’ll be charged interest for paying your tax late. The tax inspectors won’t be immediately knocking at your door and you won’t face immediate prosecution by the authorities. Above all, remember that you can - and should - still submit your tax return after the deadline has passed!
Don’t get lulled into a false sense of security, though. HMRC starts increasing the penalties for late filing if you leave for more than three months, and there are also additional charges and interest to pay when it comes to actually paying your tax bill late. Dawdle too long and those penalties will quickly start to add up!
Need some support?
If you still need to prepare and file your 2015/16 Self Assessment tax return and would like some additional support, why not download our step-by-step guide for preparing and filing your 2015/16 tax return? It talks you through each stage of the process and provides lots of additional hints and tips to help you complete each section of the Self Assessment form.
If you’ve resolved to make your life easier at tax time from now on, take a look at how using FreeAgent can help you file your Self Assessment return in the future.
We’ve got some exciting news to share with you here at FreeAgent Towers. Earlier today, we announced a brand new partnership with Royal Bank of Scotland and NatWest - which will see them offer FreeAgent to their small business customers across the whole of the UK throughout 2017.
FreeAgent will be linked with businesses’ bank accounts, offering Royal Bank of Scotland and NatWest customers all the benefits of our software as well as a unique integration between their banking platform and FreeAgent which will enhance the services we both offer.
Our partnership was announced at an event at the Bank’s global HQ here in Edinburgh this morning, and we’re absolutely thrilled to have been chosen from over 30 vendors to help and support Royal Bank of Scotland and NatWest’s business customers. By moving onto the FreeAgent platform, we hope life will become easier for these small business owners (who in many cases have to do their accounting themselves) by allowing them to concentrate on running their businesses.
This is a really exciting partnership for us and we look forward to developing our relationship with Royal Bank of Scotland and NatWest throughout the rest of 2017 and beyond.
Watch this space for more information.
If you currently find yourself with a bundle of receipts, an eye on the calendar and an impending sense of doom, you’re not alone. With just under a fortnight to go to the Self Assessment tax return deadline on 31st January, time is ticking - but there’s no need to panic!
Pour a cuppa (something stronger optional) and we’ll run through the steps you can take to avoid a penalty of at least £100 for missing the deadline. You can find all of these steps and more in our handy Self Assessment checklist.
Gather your paperwork
First things first - you should dig out everything you’re going to need before you tackle the actual tax return. This might take a bit of rummaging, but think of it as good motivation for implementing an easier filing solution in 2017!
Here are the documents and information from the 2015/16 tax year that you should have to hand as a priority:
- your P60
- interest from your bank account
- your business’s income and expenses (if you are a sole trader or in a partnership)
- the value of any dividends you’ve received on shares that you own
Know what you’ve earned this tax year
If you're a sole trader and you're preparing your business's accounts to match the tax year end, the next step is to add up all your income from 6th April 2015 to 5th April 2016. This includes any sales that you completed the work for between these dates (even if you hadn't invoiced the customer or been paid for the work before 5th April 2016). If you’re using the cash basis of accounting (meaning that you work out your business’s profit based on when money comes in and is paid out, rather than on when income is earned and costs are incurred) you should calculate your income by adding up the payments that you received from customers during the tax year.
Round up your expenses
Now that you know your income, it’s time to dig out those receipts! You’re looking for any costs that you incurred as part of running your business. All of these costs will reduce your accounting profit, and some will also reduce your ‘taxable profit’, which also lowers your tax bill. When you record a cost that reduces your taxable profit, it’s often called ‘claiming’ a cost or expense.
Knowing what expenses you can and can’t claim for is sometimes a bit complicated - for example, you can only claim the cost of food and drink while you’re out and about and even then, only in certain circumstances. Don’t forget that if you work from home then you can include some of your home running costs as part of your business costs. You can check your proposed expenses against the info on HMRC’s website or our A-Z of business expenses checklist.
Even when you’re done with your receipts, don’t chuck them! Hard or soft copies of your receipts need to be kept until 31 January 2022. If you use FreeAgent then you’re sorted - you can take a snap of your receipt on your smartphone, upload it to your FreeAgent expense entry, then throw it away, safe in the knowledge that the cost will show the next time you log in. And yes, HMRC will accept the scanned receipt as proof of the expense! Just make sure you take a picture of both sides if there’s any information on the back of the receipt.
File online and feel fine
The end is in sight. Once you’ve collected up everything you need, it’s time to file - just visualise the sweet, sweet peace of mind afterwards! For more detailed help with filling and filing your tax return, don’t forget to download our Self Assessment checklist, which takes you through each stage of the process and provides lots of additional hints and tips.
Finally, visit HMRC’s website and work your way through the tax return section by section, reading all the instructions carefully and taking care to avoid mistakes. If you’d prefer not to go it alone, take a look at how using FreeAgent can help you file your Self Assessment return easily and take the fear out of tax time in the future.
A new year is a great time to review your current processes and make sure you’ve got the time to focus on those goals. That’s where the power of automation comes in! Here’s how to make some common small business tasks happen automatically, freeing up your time and energy to concentrate on making 2017 your best business year to date.
Sync your data with Zapier
Zapier connects together web apps, so when a trigger happens in one app, it will automatically perform the action in another app. Use Zapier with FreeAgent to sync your data to the web services you are already using on a daily basis, for example, add MailChimp subscribers for new FreeAgent contacts or get messages on Slack for new FreeAgent invoices.
Get automatic social insights
Useful for business of all sizes, Brand24 gives you instant access to mentions about your brand or product across the web, from social networks to influential publishers. You can discover what people are saying online about you as it unfolds in real time and there’s no need to waste time searching.
See the bigger picture for your business
Tracking cash flow is a top priority for any business. FreeAgent’s cashflow view automatically gives you a monthly snapshot of the money coming in and going out of your business, so you’ll always know if you're making or burning cash - no calculations required.
Save time with ‘If This Then That’
IFTTT is a free web-based service that allows users to create chains of simple conditional statements which are triggered based on changes to other web services. You can use it for loads of tasks such as automatically backing up your contacts to a Google Spreadsheet, having all incoming email attachments automatically saved to your Google Drive folder or even turn off your phone’s wifi when the battery is low.
Send emails automatically
FreeAgent can help you by sending automatic emails with new invoices, thank yous and chase late paying clients - leaving you free to get on with work. Mailchimp and Campaign Monitor are also great tools for creating great-looking emails and setting them to send automatically - for example, on anniversary dates or after someone fills in a form on your website.
Don’t waste hours wading through paper receipts
Ideal for busy freelancers, Receipt Bank gathers paper receipts, scans them and processes the data into FreeAgent. Save valuable hours by pulling information from receipts and invoices quickly, accurately, and efficiently.
Regularly backup data without lifting a finger
Configure safeguardmy to perform a simple data backup for all your FreeAgent cloud accounting data, and set the schedule for a weekly or monthly delivery. That’s all you have to do. It doesn’t access or store your login details, but builds a spreadsheet with your data, compresses it all into a zip file and password protects it.
FreeAgent’s easy to use online accounting software has lots of simple automation features that will save you hours and let your accounts run unaided - here's a list of third-party applications, widgets and other add-ons that FreeAgent integrates with here. With a few simple automated tasks in place you’ll be free to spend your time putting those business New Year’s Resolutions into action!
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- You deserve better: why you need to break up with your spreadsheet
- Simple ways to save yourself future Self Assessment stress
- Making Tax Digital consultation response published
- Not feeling (a) fine? You might have a ‘reasonable excuse’ for not completing your tax return
- Don’t be caught out by the Self Assessment deadline!