15 December 2018

Save yourself the post-Christmas tax return blues, says Royal London to self-employed who are yet to file

4 min read

 
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Becky O'Connor

Personal Finance Specialist

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Mutual insurer Royal London urges self-employed people who have not yet completed their 2017/18 tax return to file before Christmas and avoid the last minute January rush – but don’t forget to make the payment before the deadline

With seven weeks to go until the self-assessment online deadline (January 31, 2019) Royal London, the mutual insurer, has identified a minority –27 per cent - of self-employed Brits who fill out tax returns had not got as far as completing their 2017/18 return before December 1.

HMRC rules state that anyone who has to submit a tax return must file the return and also pay the tax due by January 31 2019[1].

Of the 72 per cent of self-employed workers who did manage to complete their tax return before the Christmas countdown began, 28 per cent had not yet paid the bill, according to the research by Opinium for Royal London[2].

One in five (18 per cent) of those who have completed their return but haven’t yet paid their bill don’t know how much they owe, but the vast majority (88 per cent) are certain they have set enough aside to pay it.

Becky O’Connor, personal finance specialist for Royal London, said: “Being self-employed comes with extra responsibilities and paying the right amount of tax - on time – is probably the one most likely to keep people up at night.

“While the majority of those who responded to this survey said they have set aside enough to pay what they owe to the taxman,  one in five – of those who haven’t yet paid their tax bill don’t know how much they will have to pay, despite the deadline being a few weeks away.”

“If you are self-employed and haven’t yet sorted your tax return, save yourself the post-Christmas tax return blues by digging out the paperwork, Government Gateway ID and password and completing the online return in the next couple of weeks. You can leave the payment til a bit later but it’s a good idea to ring-fence your tax money in the meantime so  you don’t blow it on extra pressies.”

“Paying the right amount of tax on time isn’t the only headache for those choosing to work for themselves. Other responsibilities include paying into your own pension, taking out your own life, income protection and private medical insurance, budgeting to cover cash flow gaps such as holiday and sickness, plus any other benefits that employed people are routinely offered but self-employed people must arrange – and pay for - themselves.”

“The trend towards self-employment comes with the risk of financial vulnerability for those who are not sufficiently clued up about the extra financial responsibilities.”

The rise of self-employment and the popularity of the “gig economy” has been a significant change to the workforce over recent years, with the number of self-employed people increasing from 3.3 million, or 12 per cent of the workforce, in 2001, to 4.8 million, or 15.1 per cent, in 2017.[3]

According to the ONS, this increase has been driven by a large rise in the number of people working on their own or with a partner, but with no employees, from 2.4 million in 2001 to 4 million in 2016.

The Royal London survey found the biggest proportion of self-employed people – 49 per cent - complete their tax returns on their own, while one in three (33 per cent) receive the help of an accountant and 15 per cent get help from a family member or friend.

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[1] This is the deadline for online returns, paper returns must be filed sooner

[2] Opinium surveyed 505 UK adults aged 18+ who are self-employed and fill out a tax return between November 21 and 28 2018.

[3] ONS “Trends in self-employment in the UK” https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07

For further information please contact:

Becky O’Connor, Personal Finance Specialist

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.