Self assessment tax return deadline extended in the UK February 2022

Paying tax on time is very important. A taxpayer must know and remember that failing to pay owed taxes on time or having late tax returns will result in extra charges. To avoid paying these late penalties, you need to make sure that you submit your Self Assessment Tax return within the set deadlines by HMRC or HM Revenue and Customs.

In the UK, the tax year runs from April of the current year until April next year. For this year, the tax year had started last April 6, 2021, and will end on April 5, 2022. You can submit your Self Assessment tax return by paper or via HMRC online. The deadline for you to register for Self Assessment if you are a self-employed or a sole trader (not self-employed), or registering a partner or a partnership is last October 5, 2021. For paper tax returns, midnight of October 31st is the deadline while the deadline for online 2020/2021 tax returns is on the midnight of January 31st but you can still submit up to the 28th of February 2022 without having a late filing penalty as filing tax return of the year 2021 has been extended on that day.

The deadline for paying tax owed for the previous year 2020/2021 is on midnight on the 31st of January, 2022. The only time that the deadline of the tax return in the UK may change is when you received a notice from HMRC informing you to submit an online tax return after the 31st of October, 2021. With that scenario, you will still have 3 months to pass your tax return starting from the notice date.

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What Will Happen If You Miss The Deadline?

If you are paying late or paying a day after the deadline, the charge is 100 pounds. Paying 3 months after the deadline will result in a penalty up to 1,000 pounds. If you will pay your tax bill between 6 to 12 months after the deadline, you will have to pay an additional 300 pounds aside from the earlier fines being mentioned. Some cases include paying 5% of your tax bill which is a bit expensive for any taxpayer. For worst cases like paying more than 12 months late, there will be a fine of 300 pounds including all the other penalties. If you can’t pay within 1 year, you can be penalized as high as 100% of the tax you owed on top of your original tax bill.

Penalty Waivers

HMRC has the authority to waive late penalties or charges of taxpayers for 1 month for them to have more time in paying their taxes. Penalty waivers are applicable only for those who can’t file their online return on the 31st of January if they will file online on February 28, and those taxpayers who can’t pay their tax on the deadline if they will pay their tax in full or set up a time to make arrangement and pay by April 1st. If you can pay your tax on time, then that’s the best thing to do to avoid asking for penalty waivers or paying late fees.

Gm professional accountants have offices located in London Canary wharf, Wimbledon  , Birmingham and Essex.

EIS Income tax relief declaration (30% relief) Tax return declaration.

Let’s be honest. If you are not willing to deal with high risk, you’re better off not investing in small companies. Some small companies will succeed and make their investors a lot of money shortly. However, others will have a hard time getting there – or worse yet, will declare bankruptcy.

Now, the government is aware of this issue and provides Enterprise Investment Scheme (EIS) investors with tax incentives. Said taxes reduce the negative impact of those investments that go wrong and increase the positive outcome of those that succeed.

Bear in mind, as a disclaimer, that tax rules may vary at any time given, and benefits rely on circumstances.

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What is EIS Tax Relief?

Up to 30% of income tax relief

Provided that you invest £100,000, you can get up to a £30,000 tax reduction on your annual income tax bill. However, you must hold the shares for a minimum of three years to be eligible for this. Also, as expected, you need enough income tax liability from the beginning.

Generous contribution allowance

If an amount above £1 million gets invested in knowledge-intensive companies, you invest up to £2 million per tax year. A knowledge-intensive company refers to innovative and fresh businesses that spend on research and development.

Carry back

Provided that you hold the tax allowance, you’re eligible to carry it back. You can set off the tax relief to the previous year’s tax bill, which could result in receiving back the tax you already paid.

Tax-free growth

Considering you have claimed tax relief and companies qualify, there’s commonly no need for you to pay CGT during the realization of EIS shares.

Deferral of capital gains

If you acquire a taxable gain and invest it in an EIS-qualifying investment, you can defer the capital gain as long as the money remains invested and the EIS rules are met. You may earn a taxable gain by selling a property, for instance.

Profits generated up to three years before the EIS investment and one year after can be deferred. Yes, even if you have already paid the tax, you can postpone the gain.

Once you withdraw your funds, the gain reverts to you, and you must pay CGT at the current rate. Nevertheless, you might continue deferring said gain by investing in another EIS.

Inheritance tax relief

Provided that an investment in an EIS-qualifying firm is held for two years and at the time of death, it should be eligible for 100 percent inheritance tax relief.

Loss relief

Let’s say things don’t go as intended. You might choose to deduct any losses from your income tax bill, excluding the income tax relief obtained. Do you know what this means? It means that up to a loss of £1-£38.5 can be reduced.

It reduces losses and increases gains. How?

Say you invest £100,000 in an EIS. Due to the income tax relief of up to 30%, the effective net cost could be around £70,000. Along with loss relief, it can affect your ROI, regardless of your investment is successful or not, as shown in the table.

Loss relief permits you to compose off any misfortunes against income tax. In the event that your investment falls to zero, you could subtract the £70,000 loss from your taxable income.

This gives a potential duty saving of £31,500 and means the greatest viable misfortune loss could be just £38,500 (viable expense of £70,000 less misfortune help of £31,500). In the meantime, on the off chance that your investment grew by half, because of the duty help, you could be checking out a viable gain of 80%.

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham.

What is the meaning of the 1257L Tax Code – 

It is predicted that, not only will the 1257L Tax Code not suffer any changes until around 2026, but that it will be the most common form of tax between 2021 and 2023. Considering its replacement of the 1250L tax code, the most popular tax code between 2019 and 2021, it only makes sense that there will only be any talk of change after the same amount of time is given.

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No matter what happens, the majority of taxpayers will receive an update notice to the tax code either in February or March by the HMRC. This is the time taxpayers will be fully aware of how they should calculate and determine how much they will pay out in taxes that year.

What is tax code 1257L M1

This is an emergency tax code , and means you have been provided the allowance from the month that you have commended your employment. This will not take into account your previous months. This is a measure taken if your tax code cannot be obtained from your previous employer. This should be corrected.

What Is Tax Code 1257L?

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It may seem complex or confusing, but the tax code in the UK has always been fairly simplistic, and tax code 1257L is no different.

Each tax year, there is an agreed-upon personal allowance that is granted to UK’s taxpayer. This personal allowance essentially determines how much a person can earn before paying taxes on their income. During the tax year ranging between 2021 and 2022, the personal allowance was increased to £12,570.

The HMRC then converts the personal allowance number (£12,570) into a tax code. In this case, that tax code is 1257. From there, an “L” is added, which makes the tax code 1257L.

Put simply, for the majority of taxpayers, Tax Code 1257L means that you will only be taxed on earnings that exceed £12,570.

How Much Will I Pay With Tax Code 1257L?

The 1257L tax code essentially offers an annual rebate of £12,570. This is spread out over a year. This means you’d receive a weekly allowance of £241 and a monthly allowance of £1,047.

Any income earned over this, ranging between £12,571 and £50,270, is taxed at a rate of 20%. From there, income earned between £50,271 and £150,000 is taxed at a 40% rate. Finally, for those that earn over £150,001 annually, they are taxed at a 45% rate.

Scotland has a slightly altered tax rate that is only slightly different from the numbers listed above.

Is My Tax Code Wrong?

For the vast majority of employees, the tax code should be correct. Generally, those with only a single employer and no benefits or tax-deductible allowances will be in the correct tax code setting.

Those that run the risk of being placed in the wrong tax code can typically include:

• Those that regularly shift jobs; have multiple jobs at one time; or have started, left, or are retiring from a job within that year
• Those with multiple sources of income (eg., a second job or a pension plan)
• Those with tax-deductible allowances
• Any changes to their taxable benefits (such as being given a company van for private use)

How Can I Correct My Tax Code?

If you are under the impression that you may have an incorrect tax code, immediately contact HMRC on 0300 200 3300. Speaking with them as soon as possible can reduce any potential tax errors.

Other methods of contacting HMRC about a potentially incorrect tax code is available by following the link below here – Contact HMRC.

Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham.

Accountants For private Tutors self employed or Limited Company 

While it’s true throughout the school year, the tutoring business is at its most profitable during exam season. For many, this can be just as much a time of stress as it is a time of celebration. After all, as profitable as it is during this period, it’s also going to be a hectic one. Going from student to student while also trying to keep track of your finances can wear at even the sharpest minds.

Instead, it may be better to let a skilled professional give you a hand.

If you’ve ever felt you’ve left your finances and accounting go by the wayside while focusing exclusively on ensuring your students put out good work, this is worth your time. If you’ve ever felt that you could use some help of your structuring your cash flow, this is worth your time. Simply put, if you’ve ever felt you just had too much on your hands at once, this is worth your time.

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Self-Assessment / Tax Return / Deadlines

What Is A Self-Assessment Tax Return?

Required by the HMRC, a Self Assessment Tax Return is an overview of your full income as well as a way to determine whether you have properly paid out your income tax for the year. The HMRC does this by going over your income as a PAYE (pay as you earn) employee. This ensures that they have a complete picture of how much income you’ve made from all sources throughout the year.

As a result of this tracking, you’ll want to make sure you list out any additional forms of income you’ve earned, provided you meet the criteria (see below).

Potential Tax Refunds

It may seem like you are only opening yourself up to a larger portion of your income being taken, but that isn’t entirely true. Depending on your situation, you may also have the option of getting a few tax refunds as well.

Tax Deadlines

The deadline for each annual tax year (for individual persons) goes from the 6th of April to the 5th of April the following year.

As an example, for the tax year of 2o2o/2021, all income accrued between the 6th of April 2020 to the 5th of April 2021 is counted as income that you’ve personally received, and thus must be declared on your tax returns.

As we are currently still inside of 2021/2022’s tax year frame, while everything made until the 5th of April 2022 will be a part of that year’s return form, your following tax return won’t be due until the 5th of April in 2023.

Allowable Expenses For Tutors

Office & Stationary Costs

While filling out your self-assessment tax return form, you can claim expenses on several things, including:

• Any and all Office & Stationery Costs
• Printing
• Printer Ink & Cartridge Costs
• Postage
• Computer Software
• Phone, Mobile, Fax, & Internet Fees, Costs, and Bills
• All Learning Materials, e.g., Books

[To claim computer hardware equipment, look over ‘Capital Allowances’ section below]

Working From Home

If, as a tutor, you do a considerable amount of work from home, you may be able to claim a certain portion of your costs on your tax returns. This can include things like:

• Heating
• Electricity
• Mortgage Interest / Rent Costs
• Internet & Phone Use
• Council Tax

You will want to have an accountant on hand to help effectively divide out your costs based on the amount of time spent working from home. Our accountants are especially skilled in this, and, with only a few questions, can get you a realistic number for how much you can put on your returns.

Gm professional accountants have offices located in London Canary wharf, Wimbledon  , Birmingham and Essex.

HMRC Self Assessment Penalties

Paper self-assessment tax returns were due on October 31st, and online self-assessment tax returns are due on January 31, 2022, to pay what is owed. Failure to complete a return by the due date can result in a penalty. Automated penalties are sent to those failing to complete a return, and can be sent in error.

With a reasonable excuse, a late tax return penalty can be challenged, but when you fail to submit your return the HMRC will demand payment.

 

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What Are Some Reasonable Excuses For Filing Your Tax Return Late?

A reasonable excuse is required to challenge a tax return penalty. Don’t ignore the tax department, as they are not going to forget about you.

Common reasons why people are late in submitting a return are:

• You may not be eligible for self-assessment.
• Postal delays
• Illness or death of a loved one.
• Software meltdown
• Acrimonious divorce proceedings

The penalty incurred is usually 5% of the amount owed, and if the return is three months late you will pay a penalty of 100 pounds, so it is important not to delay, and get help to make a valid appeal.

 

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Employment Rights

Employment law does not usually cover self-employed people, as they are considered their own boss. However, they still have protection for health safety and discrimination. Their rights are set out by a contract signed with their client.

 

HM Revenue and Customs (HMRC) May regard someone as self-employed for tax purposes and often need to check whether they are exempt from PAYE or whether they have employee’s rights.

If the employment status is proven to be wrong. Both individuals and their employees may have to pay the unpaid tax or lose entitlements.

 

Checking Employment Rights

A person is considered self-employed and does not have the rights of an employee when they submit invoices for the work done and are not under direct supervision when working. They use terms like consultant or independent contractor to describe themselves.

 

Excuses For Late Filing of Tax Return

If you failed to file a return by October 31, you are not alone, as the deadline is missed by over 800,000 people a year. It is obviously a huge waste of HMRC time to process all these excuses. So in 2015, a press release from the HMRC revealed that the standard 100 pound fine for failing to submit a return on time, would be waived without inquiry for those offering a reasonable excuse for lateness.

 

Your Appeal

If you are feeling anxious about your ability to successfully appeal to HM Revenue and HMRC, it may be for the following reasons.

• Late return
• An inaccurate return
• Late payment
• Incomplete records

When you do appeal an HMRC expert who was not involved with your penalty decision will conduct a review.

You may be appealing over customs duty incurred, and if you are offered a review, you can accept it to state your case. Alternatively, you can appeal to the tax tribunal, and if your excuse is reasonable your penalty may be canceled.

 

Procedure to Appeal

If the HMRC issues you with a penalty letter, use the form that accompanies it to appeal.

There may be some extra documentation to fill in for Self Assessment, VAT, PAYE, and Corporation Tax.

You can get your penalty canceled if you failed to send a tax return because you no longer need to. So if you are no longer working, you can probably explain this online. If you are going ahead with the appeal you will need.

• Date of penalty
• Date of filing your Self Assessment
• Excuse for late filing

If you are appealing the 100-pound late penalty you can do your appeal online by setting up a Government Gateway Account.

Otherwise, submit your written appeal:

Self Assessment

HM Revenue and Customs

BX9 1AS

United Kingdom

When appealing on behalf of a partnership for a late return, submit your appeal by post using the SA371, The nominated partner must make the appeal. Do not pay the fine before checking if you can appeal as there are penalties of 1600 pounds or more for one year.

 

How much do you get fined for late tax return in 2021 and 2022? or Will I get fined for late tax return?

Conclusion

As you can see, the HMRC assessment is complicated, if you don’t feel able to meet the requirements and deadlines, employ the services of a tax expert.