23.12.2020 | tax



Andrew Diver explains why there is still plenty of time to get your head around your tax liabilities.


As a result of COVID-19, you may have delayed payment of your July 2020 tax bill to January 2021. Here Head of Tax at Beatons, Andrew Diver, explains when to file, what happens if you delay and how to offset your expenses to avoid overpayment.

Electronic self-assessment personal tax returns for 2019/20 and any tax returns excluded from online filing for 2019/20, must be filed by 31 January 2021 as well as any outstanding self-assessment income tax and class 2 and 4 NIC including the payment on account (POA).

As you head into Christmas, all this extra paperwork might be weighing heavy on your mind – but don’t panic.

There is still plenty of time to get your head around your tax liabilities – and make sure you are not paying above the odds.

It pays to meet deadlines

If you don’t file your return and pay any tax due on time, you’ll face fines.
This starts with an automatic £100 fine from HMRC which is imposed regardless of whether you owe tax or not.
If you fail to file within three months HMRC can then impose an additional £10 daily fine for the next 90 days, increasing the total penalty by £900 to £1,000.
Further penalties are then imposed after six and then 12 months – and these could be based on the amount of tax you owe.
On top of these fines, you’ll be charged interest on any unpaid tax and you could even be flagged as a higher risk for future years by the HMRC.

Keep your tax liability to the minimum

To make sure you are keeping your tax liability to a minimum, bear in mind all the extra things you can use to offset your final sum:
• Claiming expenses – Make sure you claim all of the expenses that are legally available. These might include uniform expenses, tool expenses, and use of the home as an office.
• Car mileage – For use of your own vehicle for business travel you can claim up to 45p per business mile for the first 10,000 miles.
• Pension contributions – If you are a higher rate taxpayer and you have been contributing to a pension scheme then you will be entitled to additional higher rate tax relief – 25% of anything you have paid in as a personal contribution.
• Gifts to charity – Higher rate taxpayers can obtain an extra 25% reduction in their tax liability when they file their tax returns.

No leeway for Covid?

This has been a tough year for everyone, and the government are aware of this.
This is why it announced further COVID-19 support measures on 24th September 2020 as part of the Winter Economic Plan and these included the option to spread the cost of your tax bill for the 2019/20 tax year.
When you have completed your Self-Assessment tax return, you can use the online self-serve ‘Time to Pay’ service to set up a direct debit and pay any tax that is owed in monthly instalments, paid back over up to a 12-month period.
You must meet the following requirements for the 2019/20 tax year:
• no outstanding tax returns
• no other tax debts
• no other HMRC payments set up
• your Self-Assessment tax bill is between £32 and £30,000
• it is no more than 60 days since the tax was due for payment

If your business needs help preparing its tax return visit beatons.co.uk