If you have earnings outside of PAYE, you may already be familiar with the Government Gateway system. It's HMRC's portal for filing self assessment tax returns 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 when you work for yourself and the majority of your time is dedicated to earning a living. But there is an alternative...
Digital software helps those that need to submit a tax return to 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 the 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 all be done with the click of a button.
2. You get tips on how to make tax savings
Speaking of tax savings, some software providers highlight opportunities to lower your tax bill as you complete your tax return. 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 type of expenses are allowable 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.
4. It's MTD-compliant
While not a concern right now, come 2023, HMRC may expect you to complete 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 moved 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 eventually decide on, you'll immediately recognise the benefit of using digital software to send your tax returns instead of trying to navigate 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.
Sponsored post. Copyright © 2021 Mike Parkes, GoSimpleTax - tax return software that can help you manage your self assessment.