A Simple Guide to Your Self Assessment Tax Returns for 2021

Self-assessment season is upon us again, and if you are required to do so, your personal tax return needs to be completed, submitted and paid up by the 31st of January, 2022. There’s not particularly long to go, so in this article, we are going to cover if you actually need to complete and submit a return for the 2020-21 tax year (just because you have done so in the past may not mean you need to do it for this particular tax year) and a four-step approach that you can use to prepare for completing your self-assessment tax return for the 2021 tax year.

Do I need to complete and submit a tax return for the 2020-21 tax share?

Well, that’s the question and this is the first thing you need to establish. You may have received a notice on a return from HMRC, as they believe based on past returns you may have to do one for the 2020/21 year. But here’s what you should do as a basic check for yourself:

You do not need to file a self-assessment tax return if:

  • Your only income is your wages, your salary, or a pension that you receive.
  • You have no income at all.

But you do need to file a self-assessment tax return if:

  • You have any other untaxed income. Examples are: money from renting out property, tips and commissions, income from savings and investments, income from dividends either from your own company or external shareholdings and also if there’s any foreign income coming in from overseas.

  • If you’re self-employed, for example, as a sole trader you earn more than 1000 pounds for the year and that’s before taking off anything, you can claim a tax relief form.

  • You are a business partner in a business partnership.

  • You’ve had capital gains in that particular tax year.

Invertedly, if you don’t meet any of these criteria, you can still choose to fill in a tax return. And this would be to claim perhaps some income tax reliefs or prove you are self-employed, or to claim tax-free childcare, or maternity allowance.

If you’re still not sure you need to file a self-assessment tax return the best thing to do here is to go to the HMRC checking tool. It takes about 60 seconds to complete and gives you a good stare.

Timelines

The 2020/21 tax share spans from the 6th of April, 2020 to the 5th of April, 2021—and that time has already elapsed. The activity that may give rise to tax during this period is what is being assessed. And the deadline to submit a return for the period is by midnight on the 31st of Jan, 2022 and payment must be made by this time too.

Penalties and Interest

There are, unfortunately, penalties and interest in two particular scenarios. The first scenario is if you send your return late or not at all, regardless of whether there is tax owing. The second scenario is if you pay your tax bill late in both scenarios, that is after midnight on the 31st of January, 2022. For late payments, the interest is normally 5% of the outstanding tax liability at the date of late payment. You can use the HMRC calculator as a useful tool to help you calculate late submission and payment penalties for more than three months.

How to Prepare for Your Self Assessment Tax Returns

You have essentially two choices here: Either you can get a professional to complete and submit your return for you, such as your accountant or a self-assessment specialist service, or you can do it yourself. If you want to do it yourself and have not done so before in the past, We’ve put together a four-point checklist for you to follow:

  • Register to submit a return with HMRC if you’ve not already done this before in the past, or either by your accountant or even yourself or anyone.

  • Get your Unique Taxpayers Reference (or UTR for short). Once you have registered, you will be sent a unique tax reference number, also known as a UTR, and you’re going to need this and cannot complete or submit a return without it.

  • Register for an online government digital account or use a piece of commercial software.

  • Get all your relevant information together. Your P60, your payslip, statements, property income, and expenses. Whatever it is you will be declaring. Get yourself organized upfront, so the process of actually completing the return is swift and straightforward.

Finally, just to sum up, the key to filing this assessment on time is planning. Squeezing in some self assessment preparation now will lead to a less stressful experience. As always, if you are looking for more tips and guides on money, budget, and cutting waste, head to our main blog!

While we strongly advise you not to accept this as financial advice, we hope that it will at the very least offer you an opportunity to gain a new perspective and challenge your current financial situation. This article is not in any way related to any of the Fund Ourselves products.

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