Research, carried out by SimpleTax, has found the average self employed person spends six months a year dealing with their tax, including calling HMRC, going over receipts and figuring out their expenses.
Despite this, they’re still making mistakes.
The reports suggests that, on average, a self employed person earning £20k per year will overpay their tax by £1629. Unsurprisingly it also found that 74% of all the self-employed found doing their tax “stressful”.
The research found that 58% of people spent 1.5 days per month going over their accounts with another 10% spending over 3 days on it. Those spending less than a day only made up 16%.
More worryingly is that many self-employed people are overpaying tax. Along with the 20k a year £1629 figure, they also found those earning 30k a year could be sending off £2771 more than they need to.
This is meant to come down to the self-employed making mistakes over what is and isn’t an allowable expense. Expenses have oft caused problems as there is no set list due to the “allowable” definition all coming down to specific conditions.
The specific expense confusion that caused the most problems was car running costs, home office cost calculations and food claims. A third of respondents said they’d thrown away receipts as they didn’t think that particular expense would be allowed. They preferred to just pay extra tax rather than risk sending off incorrect information.
Celso Pinto, founder and CEO of SimpleTax, said: “What began as a trickle of self-employed people has turned into a tide, but tax matters relating to self-assessments certainly aren’t getting any easier.”
Image by Christian Weidinger.