6 Reasons to Start Tax Return Now

The deadline for returning the self-assessment online is January 31, 2022, or October 31, 2021 if you submit a paper return, but you must pay the invoice by the end of January.

So, in theory, most people still have a few months to start worrying about tax returns (only 6% submit a paper version).

But thanks to Covid, people are encouraged to start planning earlier this year.

“This year’s tax returns will look different to millions of people, because so many people, including Covid’s support, earned extraordinary income during the 2020/21 tax year. For the first time, it needs to be included in the tax return, “said Sarah Coles, a personal finance analyst at Hargreaves Landsdown.

“Starting now gives you time to work on change.

“We also benefit from many other perks reserved for early birds. Time to consider how to pay your invoice, opportunities to pay less, space to correct mistakes from the previous year, etc. is. .”

Much of Covid’s support was taxable. This includes self-employed income support schemes, coronavirus job retention schemes (temporary dismissals), self-isolation payments, municipal grants, and funding from the Eat Out to Help Out scheme.

Coles said: “If you applied for a self-employed grant or received a furlough payment, you must include your tax return details.

“If you are self-employed or have a partnership and receive any assistance, you must declare it on your self-employed tax return.

“All self-employed grants must be placed in a specific self-employed grant box. Other Covid payments must be placed in the Other Business Income box. Please note that you do not need to record your loan on your tax return, such as a bounce back loan or a loan from the Coronavirus Business Suspension Loan Scheme.

“If you are employed and have been temporarily dismissed, you will need to enter your income tax and income tax from P60. This will cover your temporary dismissal payments, so you will have them on your tax return. You don’t have to enter them separately. “

5 Reasons to Filing Your Tax Return Now

You have more time to think about how you pay your tax invoice

You must pay the invoice by January 31st, regardless of when you submit it. You have to save money to cover your tax claims as you progress, but there are times when things don’t go as planned. This could affect more people this year, especially if the payments from previous tax bills are staggering. The early completion of your tax return will give you more time to access your cash.

It gives you time and space to get all the help you need

This may include guidance on the website or by phone. Telephone lines during this time are much less crowded than during the January rush hour. It’s also a good opportunity to track an accountant. If left unchecked, it can be difficult to find available people, and they may charge an additional fee for a tax return made with a sudden notice.

You have time to lower your tax invoice

Most of what you are doing now only affects this year’s tax bill, but there are some “carry back” opportunities to reduce the previous year’s tax bill. When you donate money to a charity using Gift Aid, the charity regains the base tax rate, but higher surcharge taxpayers must claim the difference through their tax returns.

Gift Aid donations made by the date of filing your tax return can be included in your previous year’s tax return, so you can make your donation now and include it in your tax return. This is especially useful if your income is declining this year. This is because you can claim gift aid in the year you were paying the higher tax rate.

If you invest in the Corporate Investment Scheme (EIS) in the current tax year and want to carry back the 30% income tax deduction in the previous year, another carry-back rule applies. You can’t claim more tax exemptions than you paid, which is especially useful if you don’t have enough income to offset this year’s tax exemptions.

You have the opportunity to modify the previous year

If you find yourself making a mistake in the last few years, you can request an overpaid refund at any time in the last four years. You need to write a letter to HMRC explaining that you are claiming “overpayment relief”, evidence, a signed declaration that the details you gave are correct, and how you repay Outline what you want to do.

Learn from your mistakes

If you hold these assets in a stock or stock ISA, pay when you are entering stocks or profits from stocks, and perhaps when you realize that you need to pay capital gains tax or dividend tax. tax. Remember that if you move to ISA, you don’t need to include them in your ISA, because you need to include details of assets outside the ISA in your tax return, even if your profits are within the annual allowance. Please give me. This process is also every year. Once your tax returns are out of the way, it’s worth taking advantage of the ISA allowances you still have this year.

6 Reasons to Start Tax Return Now

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