Today I’m going to look at your Tax Return: Dates and Payments.
The two previous blogs have looked at who must prepare a personal tax return, and what can be claimed. Your personal tax return includes details of your income and capital transactions. Our focus today is 2018-19, 6th of April 2018 and the 5th of April 2019.
Income, typically includes business profits, salaries, benefits in kind, rental income and dividends
Examples of Capital transactions include sale of an investment property, shares, and your business.
Firstly, The date by which you have to send in your Tax Returns is vital. If you need to complete a tax return, then you need to register with HMRC by the 5th of October in your businesses second tax year.
Paper tax returns are still allowed. These we must be submitted by midnight 31st October 2019. At the time of writing, that date has gone, so you must submit your personal tax return online.
If there are religious reasons to not file online, then you can send in a paper tax return. Unfortunately, being a Trekkie, or a Stars Wars fan doesn’t count as a religion (in HMRC eyes)
The deadline for filing tax returns online is 31st January 2020. That deadline is also the date by which HMRC want your money.
Now for the ‘nice’ part, not! Accounts prepared, income and gains collated, allowances and claims made. Now the moment of truth, how much tax is owed.
The money owed for 2018-19 will be any tax that you owe for 2018-19, and possibly payments on account.
Payments on Account
A payment on account, let’s call then instalments, is money up front. It’s an instalment payment towards next year’s tax bill. A payment on account is due if you owe more than £1,000. There are two payments on account due, the first by 31st Jan 2020, the second by 31st July 2020.
The instalments are equivalent to 50% of the tax owing. If you owe £4,000 for 2018-19 then that’s two payments of £2,000 due.
Instalments can be a shock to the system. However, you can make a claim to reduce them. If your income is likely to be less in 2019-20, then reduce the instalments.
Where your estimate for 2019-20 turns out to be wrong there’s’ a financial impact. HMRC will charge you interest and a possible penalty.
Money owed and PAYE
If you owe less than £3,000, and you have income from a job then you can have it collected under PAYE. The tax is collected by amending your tax code.
Think of this as an interest free HMRC loan. Any tax owing will be collected via your weekly or monthly salary. Make sure your tax return is sent in by the 30th December 2019.
Inability to pay
The situation may arise where we can’t pay our tax on time.
Money should be set aside to cover your tax. That’s an ideal situation, however, life isn’t always ideal. The amount owing may be higher than we thought, what to do?
If this happens, avoid the ostrich stance, don’t delay sending in your tax return.
Get your tax return in first. Figure out what you can pay, and when, and then contact HMRC. HMRC’s debt management department will discuss time to pay.
If you impersonate an ostrich and ignore HMRC then it gets a bit lively. Penalties will clock up. HMRC will call on the services of their external debt collection agencies to help collect any tax owing.
In conclusion, tax returns: dates and payments are important. We reckon this blog will give you a better understanding about tax dates and payments.
However, if it feels too daunting to or you are time poor, then contact us for help.
We can have a cup of (virtual or real) coffee, biscuit and a chat to see how we can help you.
Pro Active Resolutions: You relax, we’ll do the tax