The festive season is nearly here. Are you all set? Are the decorations up? Have you written the cards and bought the gifts? Are the parties in your diary?
At the risk of bringing the mood down, how about your Self Assessment tax return? Is it all done and dusted?
Of course, you can put off filing until after Christmas or New Year – right up until the deadline on 31st January if you want to. Millions of people do just this every year. But why spoil your holidays knowing you have this chore hanging over your head?
If you leave dealing with your tax return until the start of the New Year, when you’re likely to be busy with your business, you’ll put yourself under unnecessary stress and pressure. And as many late filers find out each year, there can be financial consequences for leaving things to the last minute.
31st January is not only the last date by which your return has to be filed with HMRC: it’s also the final date for settling any tax you owe: fine if you file with plenty of time to spare. HMRC can input all the information you provide, produce a final bill – and you’ll have time to settle the payment. But file close to or on 31st January, and HMRC is unlikely to have time to calculate how much tax you owe and issue a bill for you to pay before the deadline has passed.
The result – even though you got your return in on time (just), you’ll automatically receive a fine for non-payment – and possibly accrue interest on the outstanding bill as well.
Not a great way to start February.
So, if you’ve left filing your 2021-22 return late this year, don’t leave it any longer. There’s still time to beat the rush if you act now! And if you’re a persistent late filer, make sure you put ‘Get my tax return in early’ right at the top of your list of resolutions for the New Year.
To remind you, the deadline for filing your online Self Assessment tax return for the tax year 2021-22 – and for settling any tax you owe to HMRC is midnight on 31st January 2023. If your tax bill is more than £1k, this is also the deadline for making the first of your two payments on account – advance contributions towards your 2022-23 tax bill. Your second payment on account will be due on 31st July 2023.
The benefits of filing your return early
There’s nothing to stop you from completing and filing your Self Assessment tax return as soon as the tax year ends on 5th April. Filing in good time brings a number of benefits:
- Peace of mind
Like any chore you’re not especially looking forward to, completing and filing your tax return is something best done sooner rather than later. Ticking it off your to-do list will give you peace of mind and leave you free to get on with other work without having it hanging over your head. If you’ve been a late filer up to now, imagine how smug you’ll feel getting this bit of life admin out of the way early.
- Better financial planning
Early notice of how much tax you owe will enable you to plan ahead so you’re able to budget and pay your bill when it’s due – rather than having it come as a surprise or land when your cash flow may be tight.
- Get refunded sooner
If your circumstances mean you’re due a tax refund, the earlier you file your return, the earlier HMRC will pay out any money due to you.
Are you eligible to pay your tax bill through PAYE?
If you already have tax deducted through the PAYE system because you’re an employee or receive a company pension, subject to meeting other criteria, you may be able to pay your tax bill through PAYE. If you’re eligible, you’ll need to act quickly. Your online return will need to be filed by 30th December.
Who needs to complete a tax return?
You need to complete a Self Assessment tax return if:
- You’re self-employed and don’t have your tax collected through the Pay as You Earn (PAYE) system
- You earn more than £100k per year – even if you are paid through PAYE
- You earn any income that’s not taxed at source
You must complete a return if any of the following applied to you during the tax year 2021-22:
- You were self-employed as a ‘sole trader’ and earned more than £1k – before tax relief
- You were a partner in a business partnership
- You received any other untaxed income, for example, from:
- Savings, investments and dividends
- Renting out a property
- Overseas assets
Don’t make the mistake of thinking that if you need to complete a Self Assessment return, HMRC will contact you. The responsibility is yours and yours alone. Pleading ignorance will give you no protection, and with fines for late filing and interest on overdue tax accruing quickly, the consequences can be costly.
However you plan to spend Christmas and New Year, don’t spend it worrying about your tax return. Every year, Inca helps hundreds of people meet their Self Assessment obligations. Get in touch if you need advice about completing your 2022-23 tax return – but hurry, time is running out.
If you never want to worry about missing a filing or payment deadline again, Inca can provide you with a hands-free solution. Not only will we calculate your liability, but we’ll also remind you when and how much to pay.