By Pauline Green, Head of Product Compliance & Programs, Intuit QuickBooks UK
These days, life comes at us fast. In the space of three years, small businesses have had to navigate a pandemic, deal with intense geopolitical uncertainty, get to grips with rapidly advancing AI and protect themselves against a perfect economic storm of soaring inflation, rising interest rates and a cost-of-living crisis.
Yet, there have been pockets of good news too. November’s Autumn Statement saw a freeze on business rates that will hand small firms a £4.3 billion tax break, while the 75% discount on the tax paid on non-domestic properties up to £110,000 for firms in retail, hospitality and leisure will be extended by another year.
At a time when many businesses are still seeking to bounce back from negative growth in the first half of 2023, the result is an improving but still challenging outlook for owners and sole traders. And it means the imminent need to file their tax return on January 31 is a headache they could do without.
What’s more, while 77% of small business owners never miss the Self Assessment deadline, a sizable proportion still claim the run-up tends to have a negative impact on their business success. Almost one in five (19%) had to cut staffing hours due to a lack of time to train people while the same number say they are forced to turn away customers.
Meanwhile, for those that miss the deadline, the fines can be considerable, something a fifth (22%) of business owners admit to having experienced first-hand. Yet even so, a quarter (25%) will leave filing their Self Assessment until the last minute, with one in ten (13%) were even forced to put their Christmas celebrations on ice to complete it during the holidays.
An alternate reality
In other words, the annual tax cycle is affecting both the motivation and performance of UK small business owners across a broad range of industries. But fortunately, it doesn’t have to be this way.
In most cases, the idea of submitting a Self Assessment tax return tends to be much worse than actually doing it. In fact, by starting early and preparing documentation in bite-sized chunks throughout the year, it’s possible to make the process of hitting that end-of-January deadline far less bah-humbug than it used to be.
Technology, also, can be any small business owner’s friend. Three-quarters (76%) of sole traders believe having an easy-to-use business tool where they can track details in an app would help lighten the load of completing their Self Assessment. The good news is that such apps are already available, often at very little cost, and can be invaluable in helping streamline and automate the tax return process from beginning to end.
The end of passion distraction
With challenging economic times here to stay for the foreseeable future, the UK’s ability to thrive is set to become ever more reliant on the health of its small business community. It is, after all, a sector responsible for 44% of the nation’s jobs and around half of turnover in the private sector. It is therefore vital it has every possible opportunity to prosper.
That includes doing everything we can to reduce the effects of the Self Assessment process. For too long, tax return season has chewed up the time, attention and enjoyment of small firms all over the country. By doing things differently and utilising the new generation of smart technologies, owners and sole traders can put an end to the annual passion distraction and instead concentrate on doing what they do best: running and growing a successful business.