SELF-EMPLOYED numbers are at a record high and thousands of newly self-employed workers in Scotland will have to finalise their first tax returns this week ahead of the self-assessment deadline on Thursday.
Ronnie Ludwig, tax expert at Saffery Champness in Edinburgh, said: "Individuals who are submitting a tax return for the first time should be aware that you can offset any business losses you have made against the tax due on other sources of income, for example on earnings from part-time work or rent on property you own.
"Also, if you paid tax in the last tax year, you can offset losses made this year against last year's taxable income and claw back some of last year's tax."
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He said that for anyone already in business but now facing a profits squeeze, there is still time to reduce the "on account" payment due by January 31, which could be too high if profits are falling in the current year.
"A reduced payment could help with cash flow if you are feeling the heat in the current economic climate," Mr Ludwig said.
"But it is important to ensure the reduced amount is accurate, because if it turns out to be lower than the final liability, interest will be charged on the outstanding amount."
Late payment leads to daily interest being charged from February 1, a 5% surcharge on the balance not paid by the end of February, then further penalties and surcharges.
"However, you can request time to pay your January tax liability," Mr Ludwig said.
"Interest will still run, but so long as you have agreed the payment schedule with HMRC by January 31, and stick to it, you should not face any penalties or surcharges."