As we face unprecedented times there is a lot of uncertainty for many; waiting for full details of the Government Support Packages to be fully understood and people trying to adjust to this new norm.
Many aspects seem out of our control at the moment but taking stock of those we can control is key.
Every year the chore of the dreaded self-assessment tax return descends upon many of us, and human nature prevails; pushing back getting our information in order and leaving things until the last minute.
However, during this time with many feeling anxious about their finances, it may be a sensible move to get your 2019/20 tax return completed as soon as possible. With only days until the end of the tax year, it won’t be long until you can do this.
Whilst there have always been positives to completing your tax return as soon as possible, the benefits may now feel more significant.
So, what are the benefits to you completing your 2019/20 tax return earlier:
- If you were employed during 2019/20 and your tax code was too high, you may have overpaid income tax. The sooner your tax return is submitted the sooner you will receive your repayment.
- If you were employed during 2019/20 and underpaid income tax, then submitting your tax return online before the end of December 2020 means you can elect for the underpayment to be collected from your future tax code, provided the underpayment is below £3,000. This will defer collection of the payment as this would be included within your 2021/22 tax code and when it is collected, it will be taken from your monthly salary as opposed to one lump sum being due by 31 January 2021.
- If you make payments on account, for example you may be self-employed or you are a landlord, and your 2019/20 income is lower than it was for 2018/19, then you may be able to reduce your second payment on account for the 2019/20 tax year, due by 31 July 2020. HMRC have announced that this payment could be deferred, but that is only a deferment, the payment will still be required to be paid and if the figure could be reduced it would be better to know this as soon as possible.
- By submitting your 2019/20 tax return as soon as possible you will understand any tax payable by 31 January 2021 and have more time to plan and prepare for this payment, rather than this feeling like an unknown.
Everyone’s circumstances are different and there may be a whole host of other reasons to get your tax return completed as soon as possible.
In addition, for many this annual chore may be something you want to take more time with this year to ensure you are claiming all the tax reliefs you can, for example:
- Could you benefit from transferring the marriage allowance?
- If you are married or in a civil partnership, is your income evenly assessed across the two of you or does one of you fall into the higher rates of tax and the other does not?
- Could you benefit from Child Benefit if your income has reduced?
- Have you been claiming all the tax reliefs for gift aid donations, pension contributions and expenses such as working from home?
If you would like support in getting your 2019/20 tax return submitted earlier this year and checking that you are claiming the basic tax reliefs and allowances you are entitled to then please get in touch.