The last tax year started on 6 April 2020 and ended on 5 April 2021. 
If you are in Self Assessment, you must file your tax return for 2020/21 and pay the tax you owe by midnight 31 January 2022. If you have a second payment on account due, the payment deadline is midnight on 31 July 2021. 
We look at five reasons to file your Self Assessment tax return early this year: 
1) You can get a speedy tax refund. 
2) Avoid paying an estimated second payment on account if you file your tax return by 31 July 2021. 
3) Plan your finances better and set aside money for paying your tax bill by 31 January 2022. 
4) You will avoid incurring penalties and/or late payment interest. 
5) Tax benefits. If you make a gift aid, you can carry back the claim to reduce your tax bill. 
What are the important deadlines and dates for Self Assessment? 
If you commenced a business as a sole trader during the tax year ended 5 April 2021, you must register for Self Assessment with HMRC by 5 October 2021. 
If you are already registered for Self Assessment, you must file your tax return for 2020/21 and pay the tax you owe by midnight 31 January 2022. 
In addition, your second payment on account for 2020/21 is due by midnight on 31 July 2021 which is calculated as half of your previous year’s tax bill for 2019/20. You should have already paid your first payment on account which was due by 31 January 2021. Payments on account do not include capital gains tax or student loans repayments. 
If your payments on account are not sufficient to cover your 2020/21 tax bill, you will be required to make a balancing payment by the due date 31 January 2022. Or it is possible that your payments on account are excessive which can then result in an overpayment. Your Self Assessment for 2020/21 will confirm your actual tax position for the year along with your advance payments on account for the current tax year 2021/22. 
As a result of the pandemic, some tax payers might have suffered loss of income in 2020/21 and therefore their second payment on account due by 31 July 2021 could be excessive. 
If you prepare and file your tax return by 31 July 2021, your tax position will be reconciled so you don’t have to pay excessive tax in advance to HMRC. 
Budget Payment Plan with HMRC 
Do you know that you can set up a Budget Payment Plan with HMRC if you want to make regular payments via Direct Debit? 
If you are up to date with previous Self Assessment payments, you can set up a Budget Payment using your online account on GOV.UK if you go to the Direct Debit section and choose the budget payment option when completing the Direct Debit form. You can decide how much you pay each month towards your tax bill. If there is anything left to pay, you will need to do this by the payment deadlines 31 January for the previous year and 31 July for your second payment on account. 
How we can help? 
We are ready to commence preparing your 2020/21 Self Assessment as soon as you provide us with your tax data. Please send your tax records to your usual Chart Accountancy contact as soon as possible, or simply upload your files to our WeTransfer portal. 
On receipt of your tax data, we will review your information and let you know if we have any questions before we prepare your tax return for your review and approval. 
If we receive your tax records by 15th June 2021, we will endeavour to finalise your tax return in advance of the second payment on account deadline of 31 July 2021. 
You don’t have to feel overwhelmed by the thought of an upcoming tax bill. We are here to help. If you are not already signed up for our Personal Tax Services, please contact Teodora Dimitrova ACCA to request a quote for our assistance with your 2020/21 Self Assessment: [email protected] 
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