HMRC reported that 2,700 taxpayers submitted their tax returns on Christmas Day last year, with the most popular time to do so being 2pm-3pm. And between Christmas Eve and Boxing Day a total of 31,400 people did so.
Some will not have been celebrating Christmas at all, and who knows about the others? Maybe they were all Christmassed out. Still, you would have thought they could have found something more festive to do.
The final deadline is on 31 January each year, so at least they are ahead of that.. If you are yet to do your tax return for the 20/21 tax year, don’t forget. There is still time to get your paperwork to us, and we can make sure it is done correctly and that you use all the allowances that are available to you.
Leaving it until the last minute comes with a number of risks.
Missing the deadline
The closer you are to 31 January, the more chance there is of something going wrong. Miss the deadline and HMRC will add an automatic £100 fine to your online account. This is payable whether you owed any tax or not. If tax is due, you will still need to pay it with interest; and as time goes on the penalties increase.
While HMRC recently announced taxpayers will not incur a penalty as long as they file by 28 February 2022 (to help self-employed individuals to cope during the pandemic), interest will still be payable from 1 February, so it’s still in your interest to file by the end of January, even if the deadline is effectively next month.
Be aware that not all payment methods to HMRC complete on the day they are made. BACS, direct debit, and cheques take three days to clear, and a first-time direct debit can take five days to go through.
Optimising your self-assessment
The less rushed the preparation of a tax return, the more opportunity there is to ensure that all tax allowances are used appropriately and recorded on the form. Things like pension contributions, gift aid, and the marriage allowance, among others, may all be available to you and reduce the tax you pay. It is also important to gather up all documentation to show employment/business income, interest payments, dividends and any capital gains or losses on asset disposals to ensure these are accounted for.
An unusual feature for the 2020/21 tax year is the need to account for certain COVID financial reliefs you may have received, including the Self-Employment Income Support Scheme and the Small Business Grant Fund.
Reduce the worry
Not knowing how much tax you owe, and having the task of preparing the paperwork can be a major source of worry for many people. While putting it out of mind is one way of dealing with it, it’s far better to understand how much you owe as soon as possible. This means you can make plans for paying the tax. Often, once reliefs are taken into account, it is not as bad as you may fear anyway.
Complete your tax return with us
Hopefully, you gave yourself a break on Christmas Day. But now really is the time to get your tax return done. Talk to us to arrange getting your self-assessment complete in good time in January, so that you can breathe easy that it’s a job well done.