A new tax year means new UK income tax rates, allowances and limits. It’s also an excellent time for business owners to evaluate their business’ progress or to start saving for a rainy day. Within this blog we explain the latest changes and what's new in 2021.
Self Assessment Tax Returns: Everything you need to know
Do you do Self Assessment tax returns? Do you have some tax due on 31st January 2021? Confused about the whole thing? Don’t worry… in this blog we summarise all of the tax that’s due by midnight on 31st January 2021 so you can make sure everything gets paid on time.
Quick update: Since we published this blog, HMRC has announced they won’t be giving penalties to tax returns submitted by 28th February. Here at Blu Sky we’re still working to the 31st January deadline on behalf of our clients to keep cashflow expectations on track. But if you do need to take advantage of the extended deadline, then you can do so until 28th February without receiving the usual penalty for late payment.
Self Assessment tax return payment 1
The first payment due on 31st January is the second payment on account for the tax year 2019/20. But only if you deferred it from 31st July 2020! If you didn’t defer it, you can forget about this one.
Next up, the balancing payment for the tax year 2019/20.
Again, this one might not be relevant to you. You’ll only need to pay a balancing payment if your earnings end up being higher than your earnings for the previous tax year. This is simply because your payments on account are calculated based on the previous tax year.
Your first payment on account for the tax year 2020/21. This one is relevant for everyone who does self-assessment tax returns.
Payment on account is based on your tax bill from the previous year. It’s paid in two equal instalments – the first due on the 31st January. You don’t need to worry about the second instalment until 31st July – phew.
Time to Pay arrangement
Three payments at once can be a lot – especially at a time like this. But if these payments total under £30 000, you can set up a TTP (Time to Pay arrangement). This arrangement enables you to pay by Direct Debit over 12 months without needing to contact HMRC by phone.
All you need to do is access the HMRC website using your Government Gateway ID. You can do that here, but you must have submitted your 2019/20 tax return at least 48 hours beforehand.
Interest will be charged from 1st March 2021 (recently extended from 1st February 2021) at 2.6% per annum, but penalties won’t be payable as long as you stick to your payment plan. So if this is of interest to you, get your return in and apply by 31st January!
That’s all for now…
Feel free to get in touch with us if you need any more information or advice on how to start filling out your tax return, or how to apply for a TTP. We’re always happy to help!
HRMC has the power to make a tax enquiry or investigation into you and your business, at any given time. Scary? Well, it shouldn’t be if you’re doing everything right. Here’s everything you need to know.
Do you do Self Assessment tax returns? Here's a summary of all of tax due by midnight on 31st January 2021 so you can ensure everything gets paid on time.