Important deadline is one week away
The tax return for 2020/21 must be filed by 31 January 2022. Any tax due is payable by the same date, but in some circumstances this can be spread over the next tax year instead. Why do individuals need to act quickly to take advantage of this?
31 January each year is the filing deadline for self-assessment tax returns. Any underpaid tax (taking into account any payments on account) must be paid by the same date, or the individual can become liable to penalties and interest. However, where the amount owed doesn't exceed £3,000 it is possible for them to elect to have the underpayment collected through their PAYE code for the next new tax year, i.e. 2022/23 for 2020/21 underpayments.
Obviously, this requires there to be an employment or private pension so that HMRC can apply the adjustment to the PAYE code. However, there is a further condition that must be met before the "coding out" can operate. The tax return must be filed no later than 30 December, i.e. just over a month ahead of the standard deadline. Anyone wishing to have their 2020/21 tax collected via PAYE must file their return within the next week, and indicate that they wish to have the tax collected via the PAYE code on the return.
If the deadline is missed, the individual can apply to HMRC for a payment plan. However, this is likely to be for six months at most unless there are exceptional circumstances, and interest will accrue on the unpaid amounts from 1 February.
Related Topics
-
Could HMRC recategorise your subcontractors?
You use subcontractors for all your building projects and almost always the same individuals. You’ve heard that this could increase the risk of HMRC recategorising them as employees. What steps can you take to counter this?
-
Tribunal rejects reliance on adviser as reasonable excuse
A recent First-tier Tribunal decision has confirmed that relying on an accountant does not automatically amount to a reasonable excuse for missing a self-assessment deadline. The case highlights the limits of delegating tax responsibilities. What does this mean in practice?
-
HMRC issues new wave of offshore “nudge” letters
HMRC has issued a further round of “nudge” letters targeting individuals it believes may have undeclared offshore income or gains. The letters form part of HMRC’s ongoing use of data from international information exchange agreements. What should you do if you receive one?