As the 31st January 2024 deadline for Self Assessment approaches, a new study by Intuit QuickBooks sheds light on how the tax season affects small businesses and sole traders in the UK: a significant chunk of entrepreneurs will be putting Christmas celebrations on the back burner to tackle their taxes.
The research reveals a concerning trend, with almost half (46%) of business owners delaying their tax filings until 2-3 months before the deadline. More than one in ten UK small businesses and sole traders have also had to work on their Self Assessment during a holiday, including Christmas Eve or Christmas Day.
Key findings:
- Deadline jitters: nearly half of business owners, 46%, procrastinate, filing their Self Assessment only 2-3 months before the deadline, and 25% are left grappling in the last month.
- Fines and fallout: 22% have faced hefty penalties for missing the deadline, totalling £114 million in fines for the 1,144,000 micro-businesses impacted on average (and the average fine being around £100 per business owner).
- Business suffering: half of business owners suffer setbacks during this time, including feeling forced to cut staff hours (19%) or turn away customers (19%).
This annual tax cycle also affects business motivation, with UK business owners saying in the lead up to the deadline their passion for running the business has suffered. 55% of business owners admitted a decline in their enthusiasm for running their ventures this year as the deadline loomed closer.
Instead of being subjected to doing their tax return over the Christmas period, UK small business owners would rather do anything but, with the results of the study stating even these festive grievances would be preferable:
- Go last minute shopping on Christmas Eve (30%)
- Travel home during peak Christmas rush (29%)
- Listen to Mariah Carey on loop (25%)
…or even spend time with their in-laws (21%), instead of having to deal with taxes over Christmas.
Pauline Green, Head of Product Compliance & Programs at Intuit QuickBooks UK comments:
“In most cases, the idea of filing your Self Assessment tax return is much worse than actually doing it. Our research shows that doing things differently can build confidence.
Starting early and being consistent is critical. With potentially tougher economic times ahead, using the tools and technology available will ultimately give UK business owners the confidence to spend their time on what they love doing – running and growing their businesses.”
73% of sole traders and small businesses said that in order to submit their tax return earlier, they’d need to understand how to prepare their documentation in bite-sized chunks.
A significant majority also expressed in the study that user friendly accounting software to track and manage tax-related details would help ease the emotional strain.
You can also check out this handy guide to business tax rules and deadlines here, to ensure you stay on top of all your dates way before the festive season in future.
