Being new in the field of self-employment can actually give you tax surprises in case you have not gathered enough information to be well aware of the tax implications. There is no escape from tax liabilities if you are associated with the business in any way. According to the professionals, this is not recommended to leave the tax payments for the eleventh hour can bring in a lot of trouble and this means you will be in a position of scarping to find the relevant dates. This will be a very stressful situation. However, once you have experienced filing the self-assessment tax returns and cleared the tax fears in the UK, it will become easier for you.
There are several queries regarding the tax fears and the relevant liabilities that come in the way of beginners who are newly associated with being self-employed or starting a business set up. This guide will help you to handle the facts about removing the element of fear from the tax procedures. The more organised you will become, the more you will be at ease in terms of tax liabilities and relevant matters. Getting delved further into the discussion will help you to develop a better understanding.
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What are Common Tax Fears and How to Solve Them?
Tax fears are common among the newly associated self-employed individuals in the business worked. Here is a list of five popular tips from professionals that can help you a lot in preparing for the tax and being confident about the procedure without any fear of the unknown.
1. Get it on a Spreadsheet
The thoughts about your tax affairs and the relevant details must be a part of the excel or google sheet, this will be very helpful when it comes to the tax payment or any investigation from HMRC. This is because of the fact that no one likes to go back into the details of the entire tax year at the eleventh hour and whether the relevant information is. This is why it is important to record everything in your record list every time you spent an amount on business expenses or make an investment to keep a follow-up.
2. Open a Business Account
This opening of the business accounts will make things a lot easier for your record. This is not even an expensive option. When you will go into the details, you will find plenty of free benefits to aval in this regard. You will be able to keep the business spending separate from the business spending. This will even sort out the expenses when it comes to arranging your spreadsheet and everything will be aligned.
3. Remember the Deadlines
This is imperative to realise the value of tax delaines that you will have to keep a track of in a tax year. 31st of July is the deadline for the payment on account. 31st January is the deadline for your tax returns. 6th April – 5th April is the duration of one tax year. 5th October is the deadline for registration for self-assessment tax returns.
4. Put Money Aside Early
No one wants to be stunned at the eleventh hour just before the tax deadline the amount of money they owe to HMRC. So it is better to be well prepared before time. According to professionals, you must keep an amount by the ratio of 20% to be prepared for your tax bills and avoid any late payments. This can cause you to pay more than what you expected.
5. Learn About How Expenses Work
The beginners mostly get confused with the expenses of a busienss and how they work in relation to tax affairs. What exactly can be deducted from the earnings and how this can affect the expenses of a busienss? Normally you will have to deduct the amount that you have spent purely for business purposes. This will ensure that you are paying tax on the number of profits that you have earned from the business.
The Bottom Line
Now that you have gathered a favour amount of information about common tax fears and ways to solve them, we can bring the discussion towards wrapping up. There are several tax fears when an individual is newly associated with the business world. However, if tax preparation is well on time and there is no chaos on the eleventh hour, you can save yourself from paying anything extra in form of penalties. We hope these few minutes of reading will help you better understand handling tax fears in the UK.
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Disclaimer: The information about tax fears in the UK provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.