One fifth of all sole traders and owners of micro-businesses are overestimating the amount that they need to pay HMRC in tax by £722 on average, according to the latest research by Coconut.
The accounting app found that the average overpayment of £722 applied to 17% of all micro-businesses and sole traders, of which the UK has a total of 5.3 million. This means an annual figure of close to £650 million, which they could be using for everything from expanding their businesses to maintaining cash flow essential to day-to-day operations, is instead being squandered.
Coconut uncovered this statistic as part of research looking at how easy sole traders and micro firms find it to navigate the tax system. Well over half of all business owners that took part in the survey stated that they feel it should be as simple as emailing (63%), but nearly half said that they struggle to understand everything they are meant to do (46%). Furthermore, 30% of all participants described working out their tax liabilities as the hardest aspect of running their companies.
More than half of the micro firms and sole traders that Coconut spoke to said that they do not claim expenses they may be entitled to (51%), while one out of every 10 indicated that they have had to borrow cash to meet tax liabilities at some point (11%). These results show why using an accountant for sole traders in Goole or anywhere else can be a useful move.