In January and July each year, the Self-Assessment fee can be a significant outgoing for sole traders and partnerships. This often has a negative impact on cashflow for many businesses, inhibiting their operation and delaying their growth.
What many do not realise, however, is that this doesn’t have to be the case.
With a Self-Assessment loan, you could spread the cost of your tax bill over time enabling you to retain capital in your business while making manageable monthly repayments in line with your budget. Read on to discover more about Self-Assessment loans.
Self Assessment is the process by which you advise HM Revenue & Customs (HMRC) of your income, gains and relevant expenses for a tax year. You currently do this by completing a tax return, sending it to HMRC and calculating your own tax liability (the online return will do the calculation for you automatically).
You must send a tax return if, in the last tax year (6 April to 5 April), you were:
The government’s online system will calculate how much tax you owe based on your earnings, and this amount needs to be paid by a specific deadline to avoid additional penalties.
A UK tax year runs from 6th April to the following 5th April. For example, if we are talking about the tax year 2022/2023, it started on 6th April 2022 and will finish on 5th April 2023. Generally, the payments need to be made in January and July each year.
NOTE: Depending on your circumstances, there may be other relevant dates and deadlines during the year to be aware of. Visit the government website for more information.
A Self-Assessment loan provides the cash you need to pay your fee by the relevant deadline. You then make repayments on the loan over 6, 10, or 12 months so you can align the repayments with income and manage finances more effectively. The capital retained can be used to operate and/or invest in the business.
Income and other outgoings are normally budgeted monthly so spreading the cost of self-assessment can help cashflow, align the outgoing with income and enable you to manage finances more effectively. The capital that you retain can be used to grow the business.
For LLP members or Partners who are taxed individually on their share of the firm’s profits, a self-assessment loan can be taken out by the firm to spread the cost, aligning it with other business outgoings and income.
In some cases, even if you have already made the payment to HMRC, we may be able to secure finance for you retrospectively if you contact us within 14 days of making the payment.
Based on a £50k Self-Assessment Loan (this is for illustrative purposes only, as individual circumstances differ).
If you are interested in spreading the cost of your next self-assessment tax bill over time to retain capital and enable you to manage your budget more effectively, get in touch with us today.
We will assess your business’ individual circumstances and work with you to decide if a Self-Assessment loan or another finance solution would be the right choice.
Got a question about this article? Complete the form below to send us an enquiry and a member of our team will get back to you asap!