Why you should go digital for self assessment in 2022

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Date: 8 April 2022

As the new tax year for 2022 gets under way, there are increasing living costs, hikes in NICs and the uncertainty of future increases. That's why it is more important than ever to complete your 2021/22 tax return now! Knowing how much tax you owe will allow you to better plan and budget for the year ahead.

Filing now does not mean you pay early, your tax owed will still be due on 31 January 2023.

Using digital software to check and file your tax owed is quick and simple. Let's have a look at why filing your self assessment tax return digitally in 2022 is a great idea.

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Enhance security

Tax return software allows you to log all income and expenses in the system. That means no more hoarding scraps of paper – instead, you can take photos of your expenditure and you can upload it to the cloud, where it's secure and less likely to be stolen or misplaced.

Record income more easily

You can use digital tools to understand when you should schedule the issuing of invoices and any follow-up emails to ensure that customers pay on time. Integrations with online payment solutions like SumUp and PayPal can also help customers pay quickly and easily using a debit or credit card, saving you from chasing payments in the first place.

Each of these payments will then filter into your tax returns, making your self assessment tax return for the 31 January deadline much easier.

By using software to request payment, any invoices paid will automatically update your accounts. For example, if you receive a payment for an invoice you sent, your predicted tax bill will be automatically updated based on the amount of that payment. This saves you time and also unifies two of your businesses most important admin tasks: invoicing and the tax return.

Real-time answers and advice

Paper, by nature, is chaotic. You'll need to file and accurately record your accounts – up to six years of your accounts, in fact, to ensure that you are covered if HMRC launch an investigation into your tax return. That will take up a lot of space, and it doesn't provide you with an easy-to-access overview of what you owe the taxman.

Digital files, on the other hand, are much easier to read. Plus, as some tax return software providers also highlight any opportunities to claim tax relief, there's an extra incentive for you to stay on top of your record-keeping.

Be MTD-ready

The self employed and landlords with annual business or property income of more than £10,000 must follow Making Tax Digital for Income Tax rules from their next accounting period – starting on or after 6 April 2024.

You'll still need to send HMRC a self assessment tax return for the tax year before you signed up for MTD for Income Tax. But after that, you can wave goodbye to the job of completing an annual self assessment tax return and all the hassle and panic that can go with it. Having to record your expenses every quarter also eliminates the risk of forgetting some expenses and not claiming them.

Sponsored post. Copyright 2022. Featured article by Mike Parkes of GoSimpleTax - tax return software that can help you manage your self assessment.

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