If you have received a letter from HMRC to file your 2019/20 tax return, then you should know that the return is due to be paid and submitted by the 31st January 2021.
What is a self assessment tax return?
A self assessment tax return is a document which reports all of your taxable income and states how much tax needs to be paid on income which has not been taxed!
What period does the 2019/20 cover?
The 2019/20 self assessment tax return is for the period 6th April 2019 to 5th April 2020.
Do I need to file a self assessment tax return?
Here are some examples if you need to file a self assessment tax return;
You started self employment between 6th April 2019 to 5th April 2020
You received other income for example property income
You receive child benefit and earn above £50k per annum
You disposed one of your investments such as a second home
HMRC have sent you a notice to file a tax return
Are there opportunities to reduce my tax liability?
Yes there are opportunities such as
Gift aid contributions
Are there penalties for late filing?
If you are submitting by paper then the deadline was on the 31st October 2020. If you are filing online then the deadline is 31st Jan 2021. Failure to submit on time may mean an instant £100 penalty. The penalty will increase depending on how late the return is and that's excluding the interest payable on any outstanding tax liability.
What should I look out for?
There are many things you should look out for but here are some we have picked out.
Nobody like nasty surprises and so if you have not prepared your self assessment yet be sure you have enough money parked aside to pay your liability.
Payment on account
An advance payment must be made to HMRC if your tax liability is above £1,000. The payment on account is typically 50% of your income tax payment. A further 50% then needs to be made by the 31st July 2021. The payment on account made will be used to reduce your tax liability for 2020/21 and the cycle continues.
Your self employment income will be subject to student loan charge if you have a student loan debt. Make sure, you are factoring this in when saving up for your liabilities in real time or this could come as nasty surprise.
If you receive child benefit and earn above £50k per annum you will be required to pay some or all of your child benefit back.
If you have made a loss during the tax year then make sure your Accountant explains you your options. You have options such as offsetting the loss against the previous years profit, or offsetting the loss against other income during the year or even carrying forward your loss to set of against profits you make in the future. The type of claim that will be made depends on what you would like and how quickly you would like the cash back.
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