If you have earnings outside of PAYE, you might be familiar with the Government Gateway system. It’s HMRC’s portal for Self-Assessment users and, come January, it’s alive with sole traders, landlords and others hoping to file on time.
The only trouble is, it isn’t the easiest to navigate. If you’re a first-time user, setting up HMRC’s portal can be a daunting task. It’s also long-winded, which is a problem if you work for yourself and the majority of your time is dedicated to earning. But there is an alternative…
Digital software helps those that need to submit a tax return keep on top of their bookkeeping. But that's just the beginning. We’ve asked Mike Parkes from GoSimpleTax to better explain the benefits.
1. It’s easy to use
Unlike the HMRC portal, the majority of digital tools are really easy to use. That’s their core selling point: simplifying your tax return process.
Too many sole traders rely on accountants to navigate HMRC’s online service because they don’t have the time to get to grips with it. But with software, finding your tax reference number, filling out the right supplementary pages and identifying tax savings can be done with the click of a button.
2. You can get tips on how to make savings
Speaking of tax savings, opportunities to lower your tax bill are highlighted to you by some software providers. GoSimpleTax, for instance, can point out payments that qualify as allowable expenditure.
Not only does this help you save some cash, but it also helps plan your finances for the next year. Knowing what classes as an expense also means you can limit your future purchases to those that are eligible.
3. You can find out what you owe at all times
I always encourage our users to file early. Why? Because filing early lets you know how much your tax bill will be in advance.
But even before you file, most digital software providers allow you to see an estimate of your bill at any time. They take the income and expenditure information that you input throughout the tax year and automatically calculate how much Income Tax you’ll owe in advance of any deadlines.
Greater Manchester Chamber of Commerce members receive a 25% discount off GoSimpleTax – Get started today and your discount code will be emailed to you.
4. It’s MTD-compliant
While not a concern right now, come 2023, HMRC may expect you to have brought your tax return process online. As part of their Making Tax Digital (MTD) campaign, all sole traders and other Self-Assessment users will be expected to file online in a certain way.
Failure to do so might result in a fine. But if you choose to use a digital tool to file, you can rest easy. Most of them are MTD-compliant and provide the crucial ‘digital link’ to HMRC.
5. You can get support with your invoicing
Once you’ve brought your bookkeeping online, you should sync it with your invoicing process. Platforms like GoSimpleTax have an invoicing feature that allows you to send incoming payment information straight to your tax return.
Not only can this save you a great deal of time, but you can also help boost your professional image. Some tools allow you to customise your invoices and can even send them from your personal email account.
Whatever platform you decide on, you’ll immediately recognise the benefit of using digital software to send your tax returns instead of using HMRC’s own portal. Not only will you save time, but you might even save money if you can claim an expense you would have otherwise missed.
**25/01/21 HMRC updated their guidance to state that they would not be issuing fines for late self-assessment tax return submissions until 28th February 2021. However, the deadline of 31st January remains for payments and any late payments will incur interest at 2.6%.
HMRC are urging customers to file their self-assessment as soon as they can - to avoid any last minute problems and to give people enough time to apply for the Time to Pay arrangement if they are going to struggle to pay their tax bill.
GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.