Stern reminder to do your taxes
YOU HAVE already missed the deadline to send in a tax return for tax year April 2016-April 2017 on paper. Now you can only do your tax return for that year online. You have until 31 January 2018 to do this.
If you're unsure of your Government Gateway password to access your HMRC account and start filing your tax return online, sort it out now.
If you became self-employed in tax year 2016-2017 and haven't yet registered with HMRC for online tax returns, contact your local tax office now as you'll need to get a password sent to you by postfor security reasons before you can start using HMRC's online portal. HMRC warn that this can take up to a few weeks, although in the Freelance's experience, the password's actually arrived sooner.
HMRC's website has been known to crash under the sheer volume of submitted tax returns in the run up to the 31 January deadline, while there are automatic three-figure fines for failing to submit your tax return by the deadline. So don't say we didn't warn you.
We also take this opportunity to remind you that you have just over five months to fill any holes in your Class 2 self-employed National Insurance (NI) contributions history before "Class 2s" (at £2.85 a week) are abolished and such voluntary contributions will be charged at a much higher rate. From April next year you will instead be charged "Class 4s" - if you make a profit of If you make a profit of over £8164 a year, that's 9 per cent of your profits.
If you've neglected to pay Class 2 contributions via your tax return for any period, the resulting holes in your NI contributions history will affect your state pension entitlements.
It emerged earlier this year that database errors by HMRC and the National Insurance office had led to some random self-employed people having their NI contributions history "overwritten" - removed from their tax calculations, so best contact your tax office now, before the January rush, to find out whether there are any gaps you need to fill with voluntary payments while there's still a cheaper Class 2 rate. There are limits on how much you can pay in as voluntary contributions and how far back in time you can backdate your voluntary payments.
Meanwhile, the Government's Making Tax Digital plan to make all self-employed folk submit quarterly tax returns online on some yet-to-be-developed platform seems to have been seen off, at least temporarily.
The Society of Authors reports that the most recent modifications to the Finance Bill mean that only businesses with a turnover of £85,000 or more will have to keep "digital records" from 2019. (£85k is the current threshold after which you have to charge VAT.) Other businesses (including most of us) are now expected to be "asked" to keep digital records and provide quarterly tax updates from a later date of 2020. There may be other changes as the Bill passes through Parliament, especially given the Government's wafer-thin majority.