A quarter of the UK’s self-employed — or around 3 million people — could be facing a double tax bill this tax return season.
New research from Intuit Quickbooks, which provides accountancy software for small and medium-sized businesses, showed that those who deferred their 2019-2020 payments due to the coronavirus will owe double, as the 31 January deadline draws nearer.
Alongside this, it’s not just those who deferred last year’s payments who could face difficulty. 12.1 million people in the UK are expected to file a self assessment return this year, but thanks to the impact of the coronavirus, this year’s return could be the most challenging yet.
Over a quarter of sole traders (26%) say they will find it harder to pay their tax bill this year due to the financial impact of the pandemic. Meanwhile, a fifth (21%) say they are less confident in completing their return accurately because of the inclusion of COVID-19 loans and schemes.
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As a result, HMRC is being more lenient towards late submissions this year. While it is still encouraging as many people to file on time as possible, if an applicant has been adversely impacted by COVID-19 it will accept that as a “reasonable excuse” for penalties to be waived, though penalties for paying tax late will broadly still apply.
READ MORE: HMRC to waive some late tax payment fines
According to the research nearly two in five (42%) sole traders misjudge the amount of tax they are due to pay, with a fifth (21%) underestimating the final amount – meaning many are faced with a nasty surprise.
QuickBooks has teamed up with Self Space on tips to encourage people to complete their tax returns mindfully. The “how-to” guide includes tips such as “lean into good stress and away from bad stress” and to “reflect on the year just gone and celebrate personal triumphs (no matter how small).”
Pauline Green, head of product compliance at Intuit QuickBooks said: “Sole traders and self-employed individuals have never faced such challenging circumstances and with other areas requiring focus, the burden of admin can be an unnecessary drain on time and resources.
“Today’s findings reveal that less than a third of sole traders are confident they know where they’ve kept their records. Using the right digital tools not only keeps track of financial information, but also gives business owners the confidence they’re filing their tax accurately. Speeding up this process means the self-employed have time to focus on what really matters: running and growing their business.”
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