As a result of the government’s unprecedented efforts to keep the economy ticking over during the coronavirus pandemic, the 31st January 2020 is set to be a Self Assessment deadline unlike any other.
HMRC have made adjustments to the tax year to support those with earnings outside of PAYE who may be struggling with their cash flow. One crucial change in particular is likely to knock your usual tax return process out of kilter. So, to help you get organised and stay updated, we’ve broken it down below.
The second payment on account deadline has been delayed
Second payments on account are the advance payments you make in July towards your tax bill. The 31st July 2020 payment on account is for your 2019/20 tax return. It’s calculated based on how much you paid the previous year and is designed to split up your tax bill to make it more affordable.
The Chancellor has announced that if you are due to make a payment on account on the 31st July 2020, you can (if you wish) defer this to the 31st January 2021. You do not need to tell HMRC that you’re deferring the payment, and they will not charge any of the normal interest and penalties for late payment as long as it is made in full either on or before 31st January 2021.
Defer yours and your January bill will be much higher
Of course, by pushing your payment on account back to January, you will effectively have to pay what you owe HMRC all in one month, which will potentially cause greater harm to your cash flow in the long run.
This can be avoided by mapping out your finances ahead of time. The earlier you file your 2019/20 Self Assessment tax return, the sooner you’ll know how much you will owe come 31st January 2021.
After all, if you don’t have the funds to pay the full amount in January, you could face late penalties. While these fees may seem insignificant now, they could cause a serious dent in your finances when added to your tax bill (and the deferred second payment on account).
Use lockdown to lower your tax bill
If there’s one silver lining to lockdown, it’s that many of us have had a lot more time on our hands to get organised. So if you want to minimise your next tax bill, make sure you’ve left no stone unturned when calculating your expenses over 2019/20.
Our software allows you to easily identify allowable expenses, alerting you of any potential tax breaks you may be eligible for so you pay no more than you owe. From mileage to marketing, there’s more that you can claim back on than you might think…
And if lockdown means you’re now working from home, you could also stand to make further savings on your 2020/21 tax bill. Start by monitoring your utility and phone bills. You can claim a proportion of certain bills as expenses, provided they’re deemed ‘allowable’ and are for business purposes.
Even additional property insurance you take out for the protection of your office equipment can be classed as an expense. All you need to do is accurately log and store your receipts before using your Self Assessment to claim.
File early with GoSimpleTax
Filing your Self Assessment tax return early allows you to better identify what you qualify for, and what you don’t. This enables better planning and the potential for tax savings, and reduces your reliance on HMRC’s (often overstretched) support team if you have a query.
Remember, filing early doesn’t mean that you need to pay early. Filing early simply means that you can see how much you owe well before your payments are due. And that’s where GoSimpleTax comes in.
You can start calculating your tax in real time today with our free trial. Simply add in your income and expenditure amounts, and our software will automatically work out the tax you’ll owe. And when you’re ready to file your Self Assessment tax return directly to HMRC, it’s just £46 for our full service – which also gives you the freedom to download tax reports and upload PDF or JPEG copies of invoices and receipts.
On top of this, GoSimpleTax keeps you abreast of any changes to your tax-paying process. From deferred payments on account to any coronavirus-related claims, you can be sure you’ll stay in the loop. Get in touch with our team to find out more.