If you were lucky enough to take some time out over the holidays, you’ve probably returned to work re-energised and buzzing with new ideas.
But before you immerse yourself fully into your business again, there are a number of reasons why you should take a moment to think about tax:
- With just days to go until 31st January – the deadline for filing your Self Assessment return and settling any tax due, it’s crucial you make sure you’re up to date with your 2022-23 tax obligations.
- If you’re experiencing financial challenges or trade is down, you still have time (just) to take action that could help lessen the impact of your tax bill or even reduce how much you have to pay.
- As we enter the last quarter of the current financial year, now is the ideal time to look ahead and lay the groundwork for a stress-free 2023-24 tax season.
Check our essential to-do list to make sure you’re tax-return-ready:
1. If you’ve not yet received a payment notice… don’t wait – settle your bill now
This is the busiest time of the year for HMRC, and their computer systems are working at full capacity. It means that if you’ve filed your return but have not yet received a payment notice, there’s a good chance it’s not going to arrive before the payment deadline of 31st January comes around.
It’s your responsibility to ensure HMRC receives your payment on time. If they don’t, you could be liable for fines and any unpaid tax will be subject to interest, so make sure you settle your bill now!
2. If paying your bill is going to be challenging… set up a budget payment plan
For businesses and individuals alike, money can be tight in January. If you’ve received a tax bill that’s come at a difficult time, or perhaps one that’s larger than you were expecting that presents a potential cashflow problem, don’t panic.
As long as you’re up to date with previous tax payments, HMRC offers the option to set up a Budget Payment Plan, enabling you to spread costs by making regular monthly or weekly payments. You can choose how much you want to pay and how often, and you can pause payments for up to 6 months if you need to.
Whatever you do, don’t ignore a tax bill. Engage with HMRC now, set up a plan that will ease the burden and ensure you meet your financial obligations without undue strain.
To set up a Budget Payment Plan, talk to your accountant or go to your HMRC online account and follow the instructions.
3. If 2023-24 is financially tougher than 2022-23… apply to reduce your next payment on account
HMRC will often require you to make two payments on account. As well as being the deadline for paying any tax you owe for the previous tax year, 31st January is also the date by which you must make your first payment on account towards the current tax year.
If your tax bill is more than £1k, HMRC will require you to make two ‘payments on account’ – each equivalent to half your tax bill. The first instalment will be due by 31st January, and the second by 31st July. In other words, by 31st January 2024, HMRC requires you to pay not only any tax you owe for 2022-23 but also to make a 50% contribution to 2023-24.
If you’re due to make a payment on account at the end of January and think your earnings for the current tax year are going to be less than last year, you can apply to have your payment reduced to a figure that more accurately reflects your anticipated 2023-24 profit.
To take advantage of this opportunity, you’ll have to act very quickly, producing revenue projections for the current tax year. If you can demonstrate that your income is going to be lower than last year, you may still have time to reduce your January payment on account, giving you much-needed relief at a time when financial pressures are high.
To reduce your next payment on account, talk to your accountant or work out what your next tax bill is likely to be and how much you can reduce your payment by, then go to your HMRC online account and follow the instructions.
Get ahead now for 2023-24
If you found preparing your Self Assessment tax return for last year time-consuming and a distraction from your business, you probably won’t thank us for reminding you that we are now in the tenth month of the current tax year.
As with most mundane but essential chores, tackling your tax return admin sooner rather than later makes good sense. You might be tempted to leave dealing with 2023-24 until later in the year, but why put it off and wait for work to get in the way? Leave it too long and we’ll be into the holiday season and you’re likely to spend a well-earned vacation worrying about coming back to your tax return.
Filing your return in plenty of time, rather than waiting for the January 2025 deadline to come around will give you peace of mind, ensure you don’t risk incurring a fine, and give you plenty of advance notice of any tax due. Of course, no matter when you file, you won’t have to pay your tax bill until 31st January 2025.
Enjoy a smoother tax return experience by engaging Inca to help you complete and file your 2023-24 return. As your trusted partner, we’ll help you optimise your tax position while making sure you stay fully compliant.
What’s more, we offer price incentives to clients who get their tax documentation to us by the end of July each year!