It is high time the UK government changed the day when self employed business owners paid their taxes. If they don’t they risk many businesses closing.
Our tax year runs from 5th April to 4th April the following year for self employed businesses who operate as a sole trader.
You then have until 31st January of the following year to pay your taxes.
That to me is the stupidest thing they could do.
Let’s consider a few things.
In December people celebrate Christmas and during that month people spend a LOT of money on presents, social occasions, decorations, clothing and all sorts.
Then there is the new year’s celebrations which again cost an arm and a leg.
However in January nobody has any money and businesses suffer tremendously. However this is the problem.
At the last week of January the business owner has three issues.
Firstly for the whole month they’ve had nearly no customers. Nobody has any money!
Secondly the business owner has to pay the wage bill at the end of the month using money that has to be put away from the December rush- assuming there was one.
Lastly that business owner has to pay his or her taxes and the accountancy bill if you hire an accountant.
For me that’s not too big a problem on the 1st of the month I send my bank statement and all receipts to my accountant who works out roughly how much I should put aside for tax. By the end of April my tax return is ready to go and I like to submit it early.
Most business owners are not so well organised and many do not have the capacity to be so well organised!
What you can do
If you are a business owner on the 1st of every month send your bank statement and all receipts to your accountant. Ask your accountant to build up your tax return on a month by month basis and tell you how much to put aside for tax. If you do this then I promise you that you’ll never have the above named problems.
On top of that your accountant will be able to tell you of any forthcoming issues and you’ll be able to take evasive action.
It would make far more sense if the tax deadline was 28th February so that the business owner has the financial means to pay the tax bill. However that is far too sensible.