Self Assessment Tax Returns

January is the start of a new year, a time for resolutions and hope for the year ahead.  It’s also the deadline for tax returns to be filed and tax to be paid.

Individual tax returns are done on a self assessment basis, this means that HMRC trusts that the figures provided are correct.  It’s possible to do your tax return online yourself and many people do so.  Unfortunately, due to the various quirks of tax law, many people end up paying more tax than they need as they’re not aware of legitimate areas where they can reduce their tax liability.

JB Accounts, your local Cornwall accountant can handle your tax return and make sure your tax payment is correct.  We can make sure you are making the best use of your tax allowances so you can be confident that you are complying with the law whilst at the same time not paying over the odds. Contact us now to see how we can reduce your admin burden.

Payments on account

Payments on account are HMRC’s way to help you spread your payments so you don’t have to pay the whole amount in January.  On first glance this seems helpful, January is usually a tight month for most people.  In reality however, you can make payments to your tax return throughout the year and 31st January is the deadline, not the only payment date.  Payments on account are not voluntary, they automatically kick in if your tax liability is £1,000 or more and less than 80% is collected through PAYE.  You have to make payments twice a year, 31st January and 31st July and HMRC will tell you how much you have to pay.  This is based on the tax due on the previous year’s return.  If your income is fairly similar each year then this isn’t too bad but if you have a bumper year followed by a very low income year, you will be expected to pay tax based on your bumper year.

The first year you hit the threshold, you have to pay the tax due for that year, PLUS 50% again as the first payment on account towards the following year.  This can make cashflow difficult, especially if you don’t find out until January.  Finding a year and a half’s tax in one go straight after Christmas is a big ask if you’re not expecting it.

 

At JB Accounts, we don’t like nasty surprises and don’t think our clients should have them either.  Your tax return can be filed from when the new tax year starts so we aim to prepare your return in reasonable time once we receive the information from you.  If we file your return in May, you don’t have to pay until the January so this gives you time to plan your cashflow.