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As many of you will know, the deadline for submitting your self-assessment tax return was extended to 28/02/22. For some of you this must have been a massive relief.
you had submitted your tax return months ago and knew how much you were due to pay? How much more relaxed do you feel because you didn’t have to rush to get everything done or stress about working out how to pay your tax bill?
If you’re not one of those lucky ones who sent off their tax return months ago, why not make next year’s return a bit different?
With over 30 years of experience, I understand just how important it is to know your finances and get your tax return done in plenty of time. 2021-2022 could be the year when you do exactly that.
Follow these 10 easy tax return tips and this time next year you’ll be sitting back and feeling smug, your last-minute tax return being one less thing to think about.
10 TIPS TO TAKE CONTROL OF YOUR TAX RETURN
The key to sorting out your tax return early is to be organised and efficient. Here are some tips:
1. Do it sooner rather than later. The deadline is 31 January, and that’s a lot of time to feel anxious about not completing it. Get rid of that stress by sorting it out earlier.
2. Block some time in your diary, even if it’s just a few hours.
3. Start looking in all the places your income and expenditure documentation is likely to be.
4.Once you’ve found the documentation, gather all your income and expenditure together in one place. Visit my website to download a free Business Accounting Template Pack, including templates for recording income and expenditure.
5. If you’re a higher-rate taxpayer (if you earn more than £50,270) you can plan and take account of the thresholds and the rates that you will be due to pay.
6. Remember the marriage allowance, if applicable. If one of you doesn’t earn enough to use up all of his/her allowance then 10% of their personal allowance can be transferred over to the other spouse.
7. You’ll need to add the Self Employment Income Support Scheme (SEISS) income, as it will count towards your taxable income. Grants 1-3 in 20/21 and grants 4-5 in 21/22. Also, any rates grant you received.
8. From April 2024, Making Tax Digital for Income Tax is set to be brought in. This will fundamentally change how people look after their tax affairs and will mean that if your turnover is more than £10,000 then you will have to keep up to date. You may find my blog on Making Tax Digital for Income Tax Self-Assessment useful.
9. The total tax due is made up of two elements: 1) a settling-up payment for the previous tax year, and 2) a payment on account, which is 50% of your estimated current year tax bill. If you think your profits for 20/21 are likely to be lower than 19/20, you can ask for it to be reduced before submitting your tax return.
10. January is the busiest time for HMRC, so if you have any questions, make sure you leave plenty of time to ask them. Remember, it takes ages at any time of the year to get through on the phone, but this is a lot worse in January!
This is what you need to know to fill in your tax return. Get the information now in preparation for next year.
As well as your DJ income you may have other income to disclose on your tax return.
Thinking about any other income, check whether you are missing anything. Do you need to request any bank certificates or are you missing any dividend certificates?
Make sure that you include all income, as well as employed and self-employed income. There are many other types, including:
Airbnb rental income - If you let out a furnished room of your main residence (or indeed the whole house), then if the gross rents received are £7,500 or less, this is all tax free.
Rental income
Partnership income
Pension
Dividends
Self-employed income – maybe you have another business?
As a basic rate taxpayer, you can earn £1,000 of savings interest per year tax free. For higher rate taxpayers, this decreases to £500.
If you receive any dividends on shares that you own, then be aware that there is a tax-free dividend allowance of £2,000.
Basic rate taxpayers pay tax at 7.5% on dividends.Higher rate taxpayers pay tax at 32.5% on dividends.
Child benefit and earning more than £50,000
Here are the steps you need to take:
Check your annual income on your P60 or your personal tax account
Include any taxable benefits, for example, medical insurance, company car or accommodation
Use the Child Benefit tax calculator
To avoid a penalty, notify HMRC, register for Self Assessment and submit a 2021 to 2022 return before 31 January 2023 and pay what is due
you had submitted your tax return months ago and knew how much you were due to pay? How much more relaxed do you feel because you didn’t have to rush to get everything done or stress about working out how to pay your tax bill?
If you’re not one of those lucky ones who sent off their tax return months ago, why not make next year’s return a bit different?
With over 30 years of experience, I understand just how important it is to know your finances and get your tax return done in plenty of time. 2021-2022 could be the year when you do exactly that.
Follow these 10 easy tax return tips and this time next year you’ll be sitting back and feeling smug, your last-minute tax return being one less thing to think about.
10 TIPS TO TAKE CONTROL OF YOUR TAX RETURN
The key to sorting out your tax return early is to be organised and efficient. Here are some tips:
1. Do it sooner rather than later. The deadline is 31 January, and that’s a lot of time to feel anxious about not completing it. Get rid of that stress by sorting it out earlier.
2. Block some time in your diary, even if it’s just a few hours.
3. Start looking in all the places your income and expenditure documentation is likely to be.
4.Once you’ve found the documentation, gather all your income and expenditure together in one place. Visit my website to download a free Business Accounting Template Pack, including templates for recording income and expenditure.
5. If you’re a higher-rate taxpayer (if you earn more than £50,270) you can plan and take account of the thresholds and the rates that you will be due to pay.
6. Remember the marriage allowance, if applicable. If one of you doesn’t earn enough to use up all of his/her allowance then 10% of their personal allowance can be transferred over to the other spouse.
7. You’ll need to add the Self Employment Income Support Scheme (SEISS) income, as it will count towards your taxable income. Grants 1-3 in 20/21 and grants 4-5 in 21/22. Also, any rates grant you received.
8. From April 2024, Making Tax Digital for Income Tax is set to be brought in. This will fundamentally change how people look after their tax affairs and will mean that if your turnover is more than £10,000 then you will have to keep up to date. You may find my blog on Making Tax Digital for Income Tax Self-Assessment useful.
9. The total tax due is made up of two elements: 1) a settling-up payment for the previous tax year, and 2) a payment on account, which is 50% of your estimated current year tax bill. If you think your profits for 20/21 are likely to be lower than 19/20, you can ask for it to be reduced before submitting your tax return.
10. January is the busiest time for HMRC, so if you have any questions, make sure you leave plenty of time to ask them. Remember, it takes ages at any time of the year to get through on the phone, but this is a lot worse in January!
GET ORGANISED FOR YOUR TAX RETURN
This is what you need to know to fill in your tax return. Get the information now in preparation for next year.
TYPES OF INCOME
As well as your DJ income you may have other income to disclose on your tax return.
Thinking about any other income, check whether you are missing anything. Do you need to request any bank certificates or are you missing any dividend certificates?
Make sure that you include all income, as well as employed and self-employed income. There are many other types, including:
Airbnb rental income - If you let out a furnished room of your main residence (or indeed the whole house), then if the gross rents received are £7,500 or less, this is all tax free.
Rental income
Partnership income
Pension
Dividends
Self-employed income – maybe you have another business?
INTEREST RECEIVED
As a basic rate taxpayer, you can earn £1,000 of savings interest per year tax free. For higher rate taxpayers, this decreases to £500.
DIVIDEND INCOME
If you receive any dividends on shares that you own, then be aware that there is a tax-free dividend allowance of £2,000.
Basic rate taxpayers pay tax at 7.5% on dividends.Higher rate taxpayers pay tax at 32.5% on dividends.
Child benefit and earning more than £50,000
Here are the steps you need to take:
Check your annual income on your P60 or your personal tax account
Include any taxable benefits, for example, medical insurance, company car or accommodation
Use the Child Benefit tax calculator
To avoid a penalty, notify HMRC, register for Self Assessment and submit a 2021 to 2022 return before 31 January 2023 and pay what is due
ALLOWABLE COSTS
The full review can be found in Pro Mobile Issue 112, Pages 44-47.
