If you received a SEISS government grant, it needs to be included on your tax return alongside any other income you earned. And if you haven’t already factored this in, you will owe more tax than expected.
COVID has added uncertainty for up to 50 million UK taxpayers. If you’re part of the unlucky majority, you could owe more money than planned. The sooner you file, the sooner you’ll know where you stand with HMRC – and what you need to do next.
If any of the below apply to you, your tax bill could be impacted. Scroll down to understand each in more detail and what you can do to get ahead of COVID.
We’ve already seen significant delays of 8-10 weeks for customers expecting a tax rebate. This is likely from the increased demand on HMRC services due to COVID and Brexit. As a result, filing your tax return in January could actually be too late for some people!
Click on each of the variants below to see how your tax bill might be affected by COVID. It might be good news and you can claim money back - but you may be looking at a higher bill than expected.
If you received a SEISS government grant, it needs to be included on your tax return alongside any other income you earned. And if you haven’t already factored this in, you will owe more tax than expected.
If you had higher work expenses due to COVID, you can deduct these from your overall income to reduce the tax you owe. This means you’ll pay less tax than you expected – and you may be eligible to claim it back. Here are some examples of expenses you may have incurred:
This is another expense that millions working in the healthcare, hospitality, beauty industries and more had to fork out for, many from their own pockets. If you had to buy PPE or additional uniform due to COVID, you can deduct it from your overall income to reduce the tax you owe.
If you’ve been working from home – even as an employee – you can apply for the work from home allowance through a tax return. As a result, your tax code will change and you’ll pay less Income Tax over the next 12 months.
If you took the plunge and started a side hustle last year, you might have to register as self-employed.
If you had a loss of income, you may be able to claim loss relief.
If you’re a British expat living abroad and you received financial support from the country you’re living in, you may need to pay tax on it if HMRC deems it income. If you haven’t factored this in already, you’ll owe more tax than expected.
Just because your taxes are due on 31st January doesn’t mean that you should leave it until then to file yours, especially given that you don’t pay until 31st January no matter how early you file. It’s a common misconception among taxpayers that you pay when you file – but this isn’t true. This year, 1.79 million taxpayers were late paying their 2019/20 tax bill, which is almost 2X more than previous years!
The sooner you file, the sooner you’ll understand how much you owe, and how much you need to save. Knowing your tax bill now also gives you time to work out a payment plan with HMRC if you need on. This way, you won’t be penalised if you can’t pay on time.
If you’re self-employed, you’ll probably know the confusion and pain of paying your tax bill across two instalments (called Payment on Account). But if your income went down last year, your next expected payment in July will likely reflect your pre-Covid income. By doing your tax return before your payment is due, you can correct any inaccuracies with your 31st July payment on account and avoid the danger of over-paying.
It’s also been reported that the self-employed who claimed the SEISS grants are being refused mortgages by major high street lenders. They’re seen as being high-risk. The earlier you file, the earlier you can get your finances in order, and know where you stand with borrowing.
HMRC is taking a lot longer to process returns than normal. This will only get worse as we approach the busier second half of the year. By filing now you reduce the risk of getting caught out by system crashes and can rectify any issues that may come up.
If you are eligible for the final SEISS grant in July, you will need to declare an accurate turnover figure for the 2020/21 tax year – and a good way to show this is with a completed tax return. Two birds, one stone. Just saying.
We match you with a certified accountant who can do your personal tax return for you in as little as 24 hours.
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