Self-Assessment Tax Deadlines

If you are already self-employed, you would be aware of the self-assessments and your self-assessment tax bill, and you would also find it stressful part of being self-employed is stressful as you have to keep on top of incomes and outgoings throughout the year to ensure that you submit a perfect assessment. What makes this even more challenging is if you are used to storing all the information manually. The tax return deadline was 31st October 2022 for those who completed paper forms and 31st January 2023 for online returns. HMRC encourages the clients to plan to give themselves the best chance to meet the self-assessment on time.

Completing a self-assessment

Self-assessment tells the HM Revenue and customs of the income gains and relevant expenses for the tax year. You do this by completing your tax return, sending it to HMRC and calculating the tax liability. If you do this online, it will calculate the tax liability automatically. You must send a tax return if you were self-employed as a sole trader in the last tax year and earned more than €1000 or if you were a partner in a business partnership. Next time you do not usually need to send returns if your only income is from your wages or pension. But you need to if you also have untaxed income from a COVID-19 grant or support payments or money from renting auto property tips and Commission income from savings investments and dividends besides foreign income.

Making tax digital

The government intends to update the method of reporting taxable income by April 2024. This would be replaced by a digital system that is known as making tax digital.

Making tax digital was the first thing announced in the spring budget in 2015 and is specially designed to transform the tax system in the UK for individual contractors and self-employed businesses. The primary aim is to make the tax system more efficient, effective, and accessible by introducing digital record-keeping. MTD is to help the HMRC to become one of the most digitally advanced tax administrations globally

Most businesses were also required to file their VAT returns every quarter from April 2019. With some already doing this every three months, it was a minor change, but these now need to be recorded digitally on MTD-compliant tools. In 2022 all the returns were stored and submitted digitally no matter the business’s turnover.

By making a digital tax, HMRC intends to collect around £4.8 billion by 2023. An estimated 9.4 billion pounds in tax revenue goes missing due to incorrect submissions or errors, which the government looks forward to reducing. There are thousands of contractors and freelancers for whom you have kept paper-based records or used excel sheets in the past to keep a tab of their expenses or invoices; it can cause errors, and the documents can also be lost.

What exactly needs to be recorded entirely digitally?

Keeping some information as empty compiled and digital records is a new requirement from HMRC. They need to be as current as possible by storing and recording all the transactions. You also need to keep some information like the business name, place of business, rate of the VAT charged, and the time and value in hand to complete the transactions. All the records must be stored digitally for at least six years, and the accounting software you use must be capable of displaying all the audit fields between records and the VAT returns.

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