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Don’t forget to file your tax returns

Not necessarily a very festive message but “save yourself the post-Christmas tax return blues,” said Royal London to the self-employed who are yet to file their tax return.

Royal London has urged self-employed people who have not yet completed their 2017/18 tax return to file before Christmas and avoid the last minute January rush – but don’t forget to make the payment before the deadline.

With only a few weeks to go until the self-assessment online deadline (January 31, 2019) the mutual insurer said that 27% of self-employed Brits who fill out tax returns had not got as far as completing their 2017/18 return before December 1.

HMRC rules state that anyone who has to submit a tax return must file the return and also pay the tax due by January 31 2019 (paper returns had to be filed earlier).

Of the 72% of self-employed workers who did manage to complete their tax return before the Christmas countdown began, 28% had not yet paid the bill, according to the research by Opinium for Royal London.

One in five (18%) of those who have completed their return but haven’t yet paid their bill don’t know how much they owe, but the vast majority (88%) are certain they have set enough aside to pay it.

Becky O’Connor, personal finance specialist for Royal London, said: “Being self-employed comes with extra responsibilities and paying the right amount of tax – on time – is probably the one most likely to keep people up at night.

“While the majority of those who responded to this survey said they have set aside enough to pay what they owe to the taxman, one in five of those who haven’t yet paid their tax bill don’t know how much they will have to pay, despite the deadline being a few weeks away.

“If you are self-employed and haven’t yet sorted your tax return, save yourself the post-Christmas tax return blues by digging out the paperwork, Government Gateway ID and password and completing the online return in the next couple of weeks.

“You can leave the payment until a bit later but it’s a good idea to ring-fence your tax money in the meantime so  you don’t blow it on extra pressies.

“Paying the right amount of tax on time isn’t the only headache for those choosing to work for themselves. Other responsibilities include paying into your own pension, taking out your own life, income protection and private medical insurance, budgeting to cover cashflow gaps such as holiday and sickness, plus any other benefits that employed people are routinely offered but self-employed people must arrange and pay for themselves.”

The rise of self-employment and the popularity of the “gig economy” has been a significant change to the workforce over recent years, with the number of self-employed people increasing from 3.3 million – or 12% of the workforce – in 2001 to 4.8 million – or 15.1% – in 2017.

According to the ONS, this increase has been driven by a large rise in the number of people working on their own or with a partner, but with no employees, from 2.4 million in 2001 to 4 million in 2016.