Whether it’s your first time or your 50th, we’ve compiled a list of expert advice for you to check before you log into your account.
Declare SEISS payments
Due to continued Covid disruption, millions of self-employed workers received payments from the self-employed income support scheme (SEISS) in the 2020-21 tax year. But not all of them realised they were taxable. One in eight taxpayers who received SEISS payments last tax year were unaware that they needed to declare them on their tax returns, according to our representative survey of 4,000 UK adults from October and November 2021. If you’re one of them, make sure you or your accountant have details of your SEISS support to hand when you’re filing your return so you can declare it.
Get your tax allowances right
If you’re trying to figure out the amount of taxes you’ll need to be aware of the tax allowances for 2020-21 which could apply to your earnings, since the majority of people don’t have to pay taxes on all their earnings. Personal allowance The personal allowance was PS12,500 in 2020-21 except if you made more than PS100,000. In the latter case, you’ll be able to lose PS1 of your personal allowance for each PS2 earned. The tax on capital gains is: If you are required to declare capital gains, declare in 2020-21, the allowance was PS12,300. Beyond that, the amount you pay for the additional tax is contingent on your tax bracket that is basic rate taxpayers pay 10 percent taxes on capital gains (CGT) on their assets and 18% on properties while higher- or additional-rate taxpayers must pay 20% of the value of assets and 28% for property. Tax allowance for dividends: The allocation for dividends in 2020-21 is set at PS2,000. Tax you pay over this amount is contingent upon your tax band for income Basic rate taxpayers are taxed at 7.5 percent, the higher rate taxpayer pays 32.5 percent, and higher-rate taxpayers pay 38.1 percent. Tax is only due on earnings that are higher than the above allowances.
Check how long your payments will take
In this age of digital transactions that seem instantaneous It’s easy to overlook the amount of time it takes for banks to transfer funds. It’s ideal to have paid your bill prior to the deadline of 31 January however, if you put it off until late, certain payments may not be swift enough to not accrue interest.
Here’s a breakdown on how time each payment method takes
5 working days: a brand new direct debit.
Three working days: Bacs an existing direct debit, cheque sent in the mail (with the minimum of delays)
Next day or same day payment options include online banking, telephone banking and Chaps. Debit card online, at branch of the bank or building society
Watch out for scams
HMRC is one of the country’s most impersonated organisations. Even if you’ve never filed a tax return in your life, you could find your inbox full of emails that claim to be from ‘HMRC’. The real HMRC received 800,000 reports of tax-related scams in 2021, and it’s likely that many more went unreported. It issued a warning in November telling taxpayers to keep on the lookout for fraudsters. Popular scams include:
Fake tax rebates
These are usually sent via text or email, often in messages that look realistic. They’ll ask you to click the link and fill in your personal details to claim it. You never need to follow a link in a message that says it’s from HMRC. Instead, you can just log into your account separately and any genuine messages will be in your inbox there.
Phone scams
They’re so prevalent that the chances are you’ve had a threatening call from a robot-voiced ‘HMRC employee’ who claims you owe them money, and that a warrant has been issued for your arrest. This simply isn’t how HMRC goes about collecting unpaid taxes.
Fake websites
HMRC reported over 8,000 malicious web pages to be taken down in 2021, some of them convincing copycat HMRC sites set up to steal your details or take payments.
Don’t forget about expenses
If you’ve been required to pay certain payments related to work like costs associated with running your own business premises or purchasing stationary, you are able to take these expenses off your earnings. This can, in turn, decrease taxes you have to pay.
Try to stick to the deadline
It might seem like a simple task however, it’s crucial this year. HMRC has once more temporarily suspending fines for filing and payments late, but it does not mean you have to wait. Although you’ll have until the 28th of February to submit your tax return and also until April 1 to pay your tax bill but you’ll be assessed interest on the amount you owe as of January 31st. It’s best than aiming for the initial date of January rather than using an extension as a reason to delay the filing. If you’re unable to finish your tax return by deadline and you’re not able to afford the interest to delay.
Don’t forget your 2021-22 payment
Payments on account for the 2021-22 tax year will also begin on 31 January 2022; the amount you’ll owe will depend on your 2020-21 income. The first instalment of your estimated 2021-22 tax is due on 31 January 2021, and the second is due on 31 July 2021.
Keep your records safe
It’s crucial to ensure every detail you’ve put on your tax return is maintained in a logical manner to be ready in the event that HMRC requests any proof. Self-employed employees must keep their documents for at least five years following the 31 January deadline for filing which means that any records connected to your 2020-21 tax return should be stored until the end of 2027.
File your 2020-21 tax return with Sherwin Currid Accountancy?
If you still need to file your self-assessment tax return, contact with Sherwin Currid accountancy.
