Handelsbanken research highlights self-assessment worries of the self-employed

More than 300,000 self-employed people have reported that they expected to miss the January 31^st deadline for completing self-assessment tax returns and paying any money owed, new research from Handelsbanken Wealth & Asset Management shows.

Research came alongside the release of HMRC data that found, as of 23^rd January, around 5.4 million people were yet to file their returns for the 23/24 tax year.

Handelsbanken Wealth & Asset Management’s research shows that substantial numbers of self-employed workers continue to struggle with completing self-assessment returns, with around 560,000 admitting they have missed the deadline in the past.

The research revealed that worries and concerns about self-assessment are on the rise among the self-employed: 17% say they are worried about the financial consequences of making a mistake when filing, compared to 11% of respondents in the same survey conducted in January 2024. A further 16% expressed concerns at the financial repercussions of missing the deadline, while only 11% said the same last year.

Around 11% say completing self-assessment returns is challenging because of their lack of financial knowledge, and 12% say completing returns is tough due to complexity in calculating their income. A further 9% stated that they find self-assessment forms challenging due to their poor record-keeping throughout the year.

Confidence also appears to be waning amongst the self-employed when it comes to completing their self-assessment forms. Only 28% of self-employed people complete their self-assessment returns themselves, with around 23% feeling confident about completing their self-assessment form correctly. By comparison, 2024 research from Handelsbanken Wealth & Asset Management revealed that 30% felt confident about completing their forms correctly at the time, highlighting a 7% drop in confidence year-on-year.

The rising number of self-assessment returns reflects the ongoing shift in the way people are employed. 50% of the working adults surveyed describe themselves as PAYE employees with no additional income, 23% as fully retired, while a quarter (25%) have some form of self-employed income. Around (13%) are only self-employed with one or more sources of income.

The main reason identified by the research for becoming self-employed is people’s desire to “follow their passion”. Nearly a quarter cited this motivation (24%), compared with 14% who became self-employed to supplement the income they receive from their employment due to the pandemic or cost-of-living crisis.

Around 12% of the self-employed made the switch following redundancy. Nearly one in eight (11%) came out of retirement to become self-employed, as they needed the additional money in light of the cost-of-living crisis.

Becoming self-employed is also having a continued impact on people’s contributions to their pensions and saving pots, the study shows. Around 15% of the self-employed contribute less to their pension, while 13% save less and 12% invest less.

Mark Collins, Head of Tax at Handelsbanken Wealth & Asset Management said:

“Self-assessment returns remain challenging for substantial numbers of the self-employed, with many at risk of missing the January 31^st deadline and others lacking confidence when completing forms.

“Customers filing their returns late risk a £100 fine, even if there is no tax to pay. Penalties can mount up if returns are more than three months late, with additional penalties for paying outstanding tax late.”