5th April - so what?
Posted on 24th March 2023 at 15:21
The 5th April marks the end of the tax year in the UK, but why is that important? The day marks the last day for you to have done anything to affect your tax position for that year, with the next day being the first day from which you can file your tax returns for that period.
With the filing window open from 6th April for those 2022/23 tax returns, we’ve put together a list of some key things you should be considering around now.
Don’t leave it until 31st January to file!
Ok, we know you officially have until 31st January to have filed your return, but typically a taxpayer should have received the documents they need to complete a return by no later than end of July, many much sooner this.
The nearer you do it to the tax year ending, the more relevant the information you can garner from your return will be and also means that you don’t get chance to lose any key information.
A common misconception we hear is that if you file earlier, you have to pay earlier – that is not the case! The payment date will remain the 31st January. So for those who aren’t great at putting money aside in preparation for tax the earlier you know any tax that is due, the more time you have to make provision for it.
Start reviewing the next year now
You should treat tax although it may be inevitable, it’s like any other expense in that it can be planned for and managed. So things you may be able to consider now include:
Are your tax codes correct – this is the way that HMRC allocate your tax free allowance against earned income such as employment and pensions where tax is deducted at source.
Have you had any changes in circumstances – increases or decreases in income or reliefs that may be attached to what you do.
Will I be in a different tax band this year – your rate of tax differs as your income increases so reliefs such as pension contributions, gift aid or tax incentivised investments such as EIS may make a difference to the impact of these.
Your plans and expectations may change but reviewing and forecasting where you might be will make you agile to make changes if needed through the year.
Record items as you go along
This doesn’t have to be complicated or held within software, but record anything related to your tax as you go along and keep the information together.
Too often we see that people scramble to get information together which means there is a greater chance of things items being lost or missed, which could affect the accuracy of the return or mean that you are missing out on reliefs available to you.
We send clients a handy little checklist each year of things that could be applicable and also a reference to items that occurred last year.
Did you have to pay a payment on account?
Payment on accounts are when HMRC ask for payments towards the following year’s tax bill, these are paid in two instalments – one in January and one in July. These amounts are based on the assumption that your tax bill will be in line with the previous year.
Things change in people’s circumstances and COVID was a prime example of that which for lots of people whether employed or a business owner caused their incomes to drop.
If something has effected your income, and it could be something positive such as new asset investment within your business or greater reliefs available to you as an individual then review early if the payment on accounts are on the right basis.
As we said, they are just calculated on the assumption that your income and tax will be at the same level. If it’s likely to be lower a claim can be made to reduce these in line with a more accurate forecast.
If you have a payment on account, our recommendation would be to do a forecast early, or even better file early, so you can assess their accuracy.
We are delighted to help many clients with handling their personal returns, if you would like to find out more about our service, please do get in touch.
#taxreturn #selfassessment #hmrc #poa #
Share this post: