Small businesses are stumped by Self Assessment

It may seem like a lifetime ago, but it’s actually just been a week since the Self Assessment deadline passed.

Were you one of those people who left their tax return until the last minute, meaning you had a mad dash to get it filed with HMRC before the deadline or potentially had to pay a fine to the taxman? Or were you one of those incredibly organised folks who followed our Chief Accountant Emily’s Self Assessment checklist and completed everything well in advance of January 31st?

It’s estimated that more than 10 million people in the UK fill out a tax return every year during Self Assessment season, including legions of small business owners, freelancers, sole traders and directors of Limited companies. But despite this high number, we rarely see any reports showing how people who file Self Assessment returns - and, in particular, those who run very small businesses - actually feel about the whole process.

That’s why we decided this year to do some research of our own to find out what small business owners really think about Self Assessment. We got in touch with polling experts YouGov and asked them to work their magic for us, and they quizzed 500+ owners of businesses that have five or fewer members of staff with questions about Self Assessment.

When the results came back, we found that:

  • 21% of people said that they were anxious about completing their tax return, while 5% said they were terrified. In contrast, just 35% said that they felt confident about going through Self Assessment.
  • 52% of people surveyed admit that they would either pay a professional bookkeeper or accountant to complete their tax return for them, and 4% said they would ask a friend or family member for help.
  • Many people often leave submission as late as January, with 46% estimating they’d complete their returns within the month before the deadline and 16% within the final week. A further 2% even admitted that they’d miss the deadline completely.

It’s interesting to see how the results show Self Assessment remains a stressful experience for many small business owners. The process is meant to be quick and easy to complete, but it’s clear that many people still don’t feel confident about filling out their tax return themselves and have to rely on help to complete their Self Assessment.

On the one hand, this could highlight that the Government needs to do more to simplify the tax system and make the Self Assessment journey even easier for the UK’s millions of small business owners. But we think it also suggests that many people would find it more beneficial to use an online accounting system to manage their business finances, as this could make filing their tax return much easier.

As more small businesses and freelancers embrace cloud accounting in the coming years, we hope to see them becoming less anxious about their Self Assessment - while also feeling empowered about completing their tax return and filing it to HMRC on time. As far as we’re concerned, tax season should be a far less stressful and worrying time than it currently appears to be.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 529 owners or partners in micro businesses. Fieldwork was undertaken between 18th - 31st December 2012. The survey was carried out online. The figures have been weighted based on FreeAgent Figures to be representative of microbusinesses in GB.

The survey deliberately focused on microbusinesses, and spoke to business owners or partners of companies with 5 members of staff or fewer.


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