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On your marks. Get ready. File – the race to get your tax return finished has started

Tax season is looming. We give some top tips for completing your tax return, including the tax deadlines you need to know about.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

This year hasn’t exactly been the one we were all expecting. To protect lives, we’ve been forced into accepting a new kind of normal.

Our working lives have also changed dramatically. For some, living rooms have become offices, and for others, they’ve had to take a reduction in hours and income.

If you’re self-employed, you’re quite likely to have experienced a reduced income, with 66% seeing their earnings drop at the start of the pandemic. For some, this loss of income could mean a cash shortfall, making this year’s tax return one of the most challenging yet. It’s worth making a plan for the deadline now, to help you get through your tax return in one piece.

Here are some top tips for completing your tax return, and a roundup of the most important tax deadlines for your diary.

Tax return dates for your diary

31 October 2020

This is the deadline for paper tax returns. Although this only affects 6% of people who complete a tax return based on last year’s figures, it’s a great starting line for everyone else who needs to complete a tax return.

By starting early, you’ll give yourself more time to find or re-order any lost paperwork and claim for everything you’re entitled to. You’ll also have three months to put extra cash aside to cover any shortfall.

If you can’t afford to pay the full debt on time, it gives you a chance to work out what you can afford. It also gives you time to set up deferred payments and put together a budget to help you make ends meet with more demands on your income.

30 December 2020

If you’re submitting an online tax return and want HMRC to collect your bill from your wages or pension, you’ll need to submit your return by 30 December 2020. Your bill will need to be less than £3,000 and you’ll need to already pay tax via PAYE to be eligible.

29 January 2021

The very last deadline for the ‘time to pay’ initiative. If you were unable to work, and didn’t qualify for help from the government, you may have dipped into funds you set aside to pay your tax bill.

Even if you did qualify for help, it’s likely you had to wait weeks for your payment and then still received less than your usual income. You might have been forced to use your tax cash to get by.

Thankfully, the government has allowed self-employed people to defer payments. If you can’t pay the tax you owe by the final deadline, make sure you fill in your tax return by midnight on 29 January 2021 at the latest.

You can then apply to use ‘time to pay’ 48 hours later, which will mean that you can stagger your payments throughout 2021. You might want to set this up earlier to avoid any last minute hiccups.

Be aware though, you’ll pay interest on the debt. You’ll also need to make these payments at the same time as putting money away for next year’s tax bill, which could be a struggle.

Find out more about staggering payments

31 January 2021

This is the deadline for completing your online tax returns and making your balancing payment for the 2019-20 tax year, unless you are using ‘time to pay’ as mentioned above. But, if you can help it, don’t leave it to the last minute.

If something goes wrong, then it’s unlikely you’ll have time to put things right. For instance, you might not be able to log into the Government Gateway to complete your return, or you could realise you’ve misplaced paperwork and need to order replacements.

If you're self-employed, 31 January 2021 is also the day you'll have to make your first payment on account for the 2020-21 tax year. If you deferred the July 2020 payment on account, you’ll also need to pay this by 31 January 2021 to avoid paying interest.

This article isn’t personal advice. If you’re unsure if a course of action is suitable, or you need help with investment or financial planning decisions, please speak to a financial adviser. Tax rules change and benefits depend on individual circumstances.

Upcoming offers for self-employed HL clients – register your interest today

With more and more people becoming self-employed, we’re looking at ways we can help our clients who own their own business. If you’d like to be notified about upcoming offers please register your interest.

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    More useful tips for the self-employed

    Running your own business can have its perks. But if the past few months have taught us anything, it can also bring times of uncertainty and less security than being on the pay roll.

    Download our guides for more tips on pensions for business owners and helpful tips on saving for the future if you work for yourself.

    Guide to pensions for business owners

    6 smart ways to save for the future

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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