The deadline for filing paper tax returns passed on 31 October 2020. If you missed it, don’t worry; you still have until 31 January 2021 to submit your tax return online.
By this date, you must have submitted your return for the 2019/20 financial year and paid off any tax you still owe for the year.
In this blog post, local tax advisors, Manchester based MCC Accountants, explain how to submit your tax return on time.
Do I need to submit a tax return?
Most taxpayers in the UK have their taxes deducted automatically from their wages and pensions and do not need to submit a tax return. However, if any one of the following applied to you in the tax year 6th April 2019 to 5th April 2020, you must submit a tax return:
- You were self-employed and had an income greater than £1000.
- You earned over £2500 by letting out a property you own or other untaxed income such as commission.
- You earned more than £50,000 and you, or your partner, claimed child benefit.
- You had an income of more than £100,000.
- You earned £10,000 or more pre-tax from your investments, savings and shares.
- You need to pay Capital Gains Tax.
- You were advised by HMRC that you didn’t pay sufficient tax last year and you have not yet made up the difference through voluntary payments.
If you are still unsure about whether you need to submit a tax return, you can check using the Government’s online tool, available here.
If you are filing your tax return online for the first time, you need to register here for HMRC to set up your online account. They’ll then send you a letter which contains your taxpayer reference code, which you’ll need to log in the first time you use the service. Don’t leave it to the last minute to register as it can take 10 days for you to receive this activation code.
If you are self employed, you need to be aware of a further deadline: 30 December 2020. By this date, you must file your tax return online if you wish for the tax which you owe to be collected via your tax code through PAYE. You are only eligible to opt into PAYE if you already have income taxed through PAYE, that is to say, if you are both employed and self-employed. Your 2019-2020 self assessment tax bill must also be under £3,000. The advantage of opting into the PAYE system is that any tax you owe would be paid over the course of the year from April 2021, rather than as a single lump sum in January 2021.
What happens if I miss the deadline?
If you miss the deadline for submitting your online tax return, you will have to pay a fine of at least £100. If you do not pay this fine within three months, you will be charged an extra £10 a day for a maximum of three months. After this period, you will be fined £300, or 5% of the tax owed. It is therefore imperative that you submit your return on time – the financial penalties for missing the deadline are steep.
Once you’ve submitted this year’s tax return, you should turn your mind to 2022. Open a business account to keep your personal finances separate from your business’, keep receipts for tax deductible expenses and consider starting a spreadsheet to track your income, or speak to a member of the team at MCC Accountants to find out how we can simplify the process. Under the Government’s ‘Making Tax Digital’ (MTD) plans, you may soon only be able to submit your tax return online, as paper returns are phased out over time. By planning ahead, you’ll be ready for any changes the Government makes.
MCC Accountants
If you are looking for local tax advisors, Manchester based MCC Accountants are here to help. Give us a call on 0161 707 1500 or use our contact form.
