With the self assessment 2021/22 tax return deadline rapidly approaching, now is the time to get started on your submission.

The deadline for completing your return for the 2021/22 tax year is 31 January 2023. While extensions have been given in recent years due to COVID, it’s looking unlikely this will be the case this year.

Submitting your return on time ensures you avoid paying hefty penalties and interest on the money owed.

If we do your tax return for you, please be rest assured that you’re in safe hands, and if we have your information, your self assessment will be submitted on time.

Do I need to complete a self assessment tax return?

If you’re self-employed, (a sole trader for example), you will need to file a self-assessment return. This is also the case for partners in partnerships and landlords who receive rental income. Directors of limited companies who pay themselves a dividend may also need to file a return.

You can check if you need to send a return on the Government website.

Why should I submit my return now?

Although the deadline isn’t until 31 January 2023, there are many benefits of submitting your tax return early.

Improved cashflow management

The earlier you submit your self-assessment return, the sooner you’ll know how much tax you owe. You don’t need to pay your tax bill at the same time as filing your return, so filing earlier will give you plenty of time to budget and manage your cashflow accordingly before 31 January.

Giving yourself that extra bit of notice enables you to adjust your finances and make provisions where needed. Even if you end up with a bigger bill than you were expecting, it will be much easier to pay it when you’ve had a month or two to plan ahead.

On the other hand, missing the filing and payment deadline will result in having to pay interest on your tax bill, as well as penalties. Cashflow problems are very common at this time of year, so avoiding any extra costs is crucial.

More time for tax planning

Making a headstart on your return will give you time to explore the wide range of reliefs and allowances available.

Filing early can also give you more time to seek expert tax advice. Accountants know the tax system inside out, and can advise you on how to become as tax efficient as possible while staying compliant. Working with a specialist may introduce you to methods of reducing your tax liabilities that you were previously unaware of.

If you work as a sole trader or partner, you may be able to deduct some of your business costs as allowable expenses, which can include money spent on office supplies and travel, as well as the costs of running your business premises.

Other sources of tax relief include claiming on tax-free charitable donations and claiming any pension contributions that you make throughout the year.

Access tax refunds sooner

If you file your return early and you’re owed a refund, there’s a good chance you’ll receive it ahead of the deadline.

HMRC will let you know the amount you’ve overpaid by as soon as you complete your self-assessment form. After that, they’ll be able to process your refund, and you may not have to wait until 31 January to receive it. If you think you’ve overpaid, filing earlier can speed up the process.

Peace of mind

A looming tax deadline can make it hard to actually enjoy the holidays, but completing your forms now may alleviate some unnecessary stress in the coming weeks.

Avoid these common mistakes when submitting your tax return

Thousands of taxpayers make mistakes when completing their self assessment. Below we’ve highlighted some of the most common issues and how to avoid them.

Missing the deadline

Missing the self-assessment tax return deadline can be expensive. People who file or pay their tax return up to three months late will need to pay a £100 penalty to HMRC, with increased fines thereafter. For those that pay their tax late they will not only be charged interest, but also a penalty which will be based on a percentage of the amount of tax outstanding.

Taxpayers often underestimate how long the process will take, so starting your return earlier will give you more time to meet the deadline. If you think that you won’t be able to pay your bill in full by 31 January, you can arrange a payment plan with HMRC.

Your accountant can ensure your return is done on time by maintaining your records throughout the year and submitting your forms on your behalf.

Submitting incorrect figures

It’s easy to make mistakes when you’re in a rush, so it’s important to give yourself plenty of time to double-check your calculations. Submitting incorrect information may result in an investigation by HMRC, or even prosecution in the case of deliberate wrongdoing.

Maintaining accurate and up-to-date records throughout the year can help you avoid this problem, as well as make it quicker and easier to submit your return.

If you do make a mistake on your tax return, you can make a change up to a year from the amended deadline.

Underclaiming or overclaiming tax relief

It’s important to claim the right amount of tax relief. People who miss out on available reliefs and allowances end up paying more tax than they owe, while those who overclaim may face an investigation from HMRC – or even prosecution.

Tax can be complicated and legislation changes all the time, so getting it right requires a keen eye for detail and some expertise. Working with a chartered accountant can help you retain more of your earnings, while ensuring that you are compliant with any rules and regulations.

It’s important to keep detailed records of any business expenses throughout the year, too. While you may not have to submit them with your return, you’ll need to keep them on hand in case HMRC asks for proof.

Forgetting about payments on account

On top of your bill for the 2021/22 tax year, HMRC may ask you to make an advance payment towards your next self-assessment bill. This is called payments on account and can result in you paying 50% more than you were expecting on 31 January.

You’ll need to factor this cost into your budget. Submitting your forms well in advance will give you time to set enough money aside. Likewise, you can start budgeting for the second instalment, which will be due 31 July 2023.

It also pays to think ahead. If you think your tax bill will be lower than last year, you can ask HMRC to reduce your payments on account online. Furthermore, looking at HMRC’s guidance on payments on account can help you prepare.

Don’t forget to declare any COVID-19 payments

If you received any government support during COVID-19, please don’t forget to declare this on your tax return.

Any grants received are taxable and should be declared for the 2021 to 2022 tax year before the deadline on 31 January 2023.

The Self-Employment Income Support Scheme (SEISS) application and payment windows during the 2021 to 2022 tax year were:

• SEISS 4: 22 April 2021 to 1 June 2021
• SEISS 5: 29 July 2021 to 30 September 2021

SEISS is not the only COVID-19 support scheme that should be declared on tax returns. If taxpayers received other support payments during the 2021 to 2022 tax year, they may need to report this on their tax return if they are:

• Self-employed
• In a partnership
• A business

For further information about this, please head to the gov.uk website.

The benefits of using an accountant to help with your tax return

Many taxpayers choose to do their self-assessment tax return by themselves. Hiring an accountant can have a lot of benefits, especially if you run your own business or have multiple sources of income.

If certain factors make your return more complicated, getting it right may require an expert eye. Calculating business expenses can be difficult, for example, especially if you use some items for both personal and business reasons.

It’s not just businesses that can benefit from this expertise. Hiring an accountant to file your return on your behalf can help ensure everything is submitted accurately and on schedule, and help reduce your tax liabilities.

Your accountant can also help you manage your finances and maintain accurate business records throughout the year. That way, filing your return next time will be much more straightforward.

If you have any questions about completing your self assessment tax return or would like help, please don’t hesitate to get in touch with PKB. If we submit your return for you and you have provided us with your information, you don’t need to worry – we’ll take care of everything.  If you do have any questions however, please give us a call.