While not everyone needs to be concerned about the deadline to submit Self Assessment tax returns, for those who are registered as self employed, it’s always a date etched deeply into the conscience. And yet, according to HMRC, in 2018 nearly 750,000 people missed it, most incurring fines as a result.
Here are five lessons that the tax return deadline can teach us all…
1. Get into good habits as soon as you can
There never seems to be a good time to spend a few hours setting up processes, spreadsheets and filing systems that can help you keep your financial records in a good state. And yet the sooner that you do this, the sooner you will start to make your life easier, reduce time wasted and improve your sense of control and wellbeing when it comes to finances. No matter what state your finances are in, having good systems to ensure that you know what you are spending and what income is coming in will help you.
2. Carry out a monthly reality check
It’s all very well to have an idea of what your monthly incomings and outgoings are, but it is definitely worth setting a date with your bank statements each month to check if the reality matches your planned budget. This is how you can save a fortune in those sneaky direct debits that accidently got set up after a free trial of something, or spot frauds.
3. Set yourself early deadlines
In theory, you could file a self-assessment tax return in April, after the financial year end. Getting into the habit of setting yourself deadlines which are much earlier than the final mandatory deadline allows time for unexpected delays which may stop you from paying a bill on time, or from claiming money you are entitled to if there is a deadline. For example, some people were shocked to find out they could not gain an important number (the UTR) they needed to file their tax return after 4th January if filing online. Paperwork, rules and regulations can always set you back. Life is easier if you leave yourself as much spare time as possible.
4. Allocate time to check for extra income entitlement
Sometimes life throws us little windfalls but these are not necessarily advertised or displayed clearly to us. On the self-assessment tax return for example, there are all kinds of expenses which many self-employed people do not realise they can claim for, and therefore, in a rush to submit their return, they end up paying more tax than they need to. Last year, for instance, HMRC warned that one million couples had failed to claim Marriage Tax Allowance they were entitled to, which can save couples over £200 per year. The same is true of life in general. If your bank is offering new customers enticement deals, it may well be that they will offer loyal customers something if they ask for it. If you consider the numbers small or time too tight, consider that devoting an hour a month to researching if there are any opportunities for income you are not taking advantage of could be enough to pay for a weekend away or even a holiday each year.
5. Get a little expert help
As a client of Serenity Financial Planning, you have your Financial Life Planner on hand to offer advice. Take advantage of your annual review to talk about how you can further enhance your financial wellbeing and to discuss ways to help you move towards your goals, both long term and short term. And if you have a question about something in the news or a particular query, we’re always happy to help.