So it begins again.
From the 6th April, a new tax year has begun. This means that Personal Tax returns can now be completed and submitted to HMRC, notifying them of your income for the previous tax year, 6th April 2020 to 5th April 2021.
Why submit now? Surely the deadline is 31st January 2022, so there is plenty of time?
Well, if you are a contractor working in construction, then you will have had tax stopped during the year from your income, meaning that it is likely that you are due a refund from HMRC. Most of our CIS contractors get their books to us by the middle of May, so that they can obtain their refund swiftly.
Other clients are organised and we have their records in by June, as they like to know that they have met their obligations, and that they can have the clear mindset of ticking that off their “list” of things to do.
We have somer higher earning clients whom have made substantial personal pension contributions in the previous tax year and are looking to obtain the corrected tax treatment that is obtained by submitting a tax return, usually generating a tax refund.
Directors that receive Salary and then dividends from their business are usually next in the queue, some of them have other interest and income such as rental properties or other investments, once we have their P60, property rental records and their dividend paperwork these can be processed.
And finally, there are the sole traders, those that are trading full time or as a second/ third business along employment, they will likely take a little time double checking their records before submitting to us to complete their accounts and tax return,
If it is expected that you are going to have a tax liability to pay., then we know that having more notice to prepare, shuffle funds around, maybe you’ve already a tax savings pot, will help in the long run. The issue is that leaving your tax return to the last moment, that you will have minimal time to prepare for the tax liability, putting further stress on your situation. It is better to know, so your can prepare, and put plans into place where required, than have no notice and then have another pressure to consider.
Another benefit of having your tax return completed early, is that if you are in the situation where you make payments on account in July, that if your income has fallen, then we can make an application to reduce these payments on account to match your eventual tax liability.
Finally, if you claim tax credits., then when you have to renew these by July, you are certain what your income was for the previous year, and can then make the relevant adjustments to your claim.
As you can see, most of the above reasons for having your tax return completed early are for cashflow and mindfulness, knowing the situation so you can either rest easy knowing what and when you have tax to pay., being able to plan if required.
If you have a tax return that requires completing, please get in touch.
