Self Assessment offers a convenient way to file tax returns and settle any outstanding Income Tax and National Insurance Contributions (NICs) for many professionals, including sole traders. Whether you’re completing your Self Assessment tax return yourself or getting a little help from a professional like us, there are a few dates that will certainly be etched into your calendar. The deadline for filing online tax returns and paying any tax owed is now upon us, but what if you’ve completed the paperwork but have no way to pay your Self Assessment bill on time?
As you may have experienced, self-employment is rewarding but often very challenging. Managing cash flow is one of the many difficulties you’ll face as a self-employed professional or sole trader, with poor cash flow or late paying clients often leaving you with very little in the bank. Whilst we’d always advise putting money for your tax and NI payments aside with every invoice settled, not having enough to settle your Self Assessment bill can happen to the best of us. Here we detail the steps you should take if you can’t pay your Self Assessment bill on time…
File your tax return
Filing your Self Assessment return on time is still an important step, regardless of when you realised you wouldn’t have the funds to pay the tax owed. When completing your return, be sure to claim the tax reliefs you are entitled to, many self-employed professionals don’t. There are several allowances and reliefs that you’ll be entitled to as a self-employed person. Each has the potential to reduce your tax liability, which will make your tax bill much easier to pay.
You can reduce your liability further by claiming for business expenses. These expenses must be for purchases made solely and exclusively for business purposes.
Get in touch with HM Revenue and Customs (HMRC) as soon as you realise that you can’t pay your Self Assessment tax bill. They’ll talk you through several options to ensure your tax bill can be settled and interest or penalties minimised. You will be able to set up a payment plan to pay your tax in instalments over the coming months. Alternatively, you can discuss a date for payment in full.
Contact HMRC’s Payment Support Service on 0300 200 3835 to discuss your options.
Reduce payments on account
If you cannot pay this Self Assessment tax bill because you earned significantly less than expected, then you could reduce your payments on account.
Payments on account are advance payments towards your next tax bill. Reducing your payments on account will leave you with less tax to pay both now and in July when the second instalment is due. Please note, if you reduce your payments on account too much, interest will be charged on the shortfall. You can reduce your payments on account through your Self Assessment account. You can also fill out an SA303 and submit it by post.
Already missed the deadline?
If you’ve already missed the Self Assessment payment deadline, contact HMRC’s Self Assessment Payment Helpline as soon as possible on 0300 200 3822. If you have received a demand for payment, contact the office detailed on this correspondence.
Need help with Self Assessment? Call our accounting experts on 0191 251 7599 or email firstname.lastname@example.org for assistance.