Sole traders: are you spending too much time on your tax returns?

The survey also showed that 45% of sole traders spend five hours or more completing their personal tax returns, with 22% spending ten hours or more on their returns.

Sole traders in the UK appear to be choosing to complete their tax returns without any help from software or accountants, which could be one reason why it’s taking so long to complete. 63% of sole traders surveyed said they manage their tax returns alone, but is it worth it when it takes almost an entire day – unpaid – to complete?

As a sole trader, completing a personal tax return by yourself can be time-consuming, as you must gather your receipts (expenses), invoices and remittances and then manually input data into the correct format in order to submit to HMRC. If you’re a sole trader who’s done a personal tax return by yourself before, you know how much of a hassle it can be. But if it’s your first time, you might feel completely overwhelmed as the deadline to submit online personal tax returns to HMRC is less than two weeks away.

The YouGov survey also aimed to discover sole traders’ opinions on the current self-assessment reporting system, and it found that 55% dislike the current process. Whilst the government aims to simplify the process with Making Tax Digital, which will involve simpler, quarterly filing online, it will force sole traders and small business owners alike to work to the government’s deadlines constantly, instead of having almost 10 months to file an online return as is the case with the current process.

Nonetheless, the deadline for the online submission of tax returns for the tax year 6 April 2015 to 5 April 2016 is fast approaching. You can choose to either give up the hours over the weekend to complete your tax return, or you can have an accountant complete and submit your return for you. If your return is not submitted by midnight on 31^st January 2017, you will automatically be subject to a £100 fine.

In addition to having self-employed income, you must complete a personal tax return if:

• You are a higher-rate tax payer
• You receive rent or income from property in the UK
• You receive foreign income even you don’t normally live in the UK
• You receive any form of untaxed income, capital gains or losses
• You have your own pension fund or certain savings/investments
• You receive other untaxed income specified by HMRC

Visit our website for more information on personal tax returns, or contact us here