It is that time of year once again, where Accountants around the country are scrabbling around to get hundreds & thousands of Tax Returns finalised, signed and filed before 31st January 2021!
If you aren’t quite sure whether you need to file one, here are the most common reasons you would:
- Self-employed
- Sole Trader
- Freelancer
- Have rental properties
- Receive dividends from a Company
- Earn an income from stocks/shares
- Sold an asset – such as a 2nd property
- and many more!
What does this all mean?
It means HMRC need a Tax Return, completed and filed, all by the 31st January 2021.
If you have tax to pay, this must also be paid by 31st January too!
Some people are happy to complete and file this themselves online through HMRC.
However, from experience, even the “simplest” of tax returns can be done incorrectly, and you can sometimes be losing out on deductions or allowances. Maybe even refunds!
Tax professionals train for years in this area – you wouldn’t skip the dentist and extract your own tooth, right!?
What am I taxed on?
The easiest answer is “untaxed income” – sounds simple right?
For example, if you earn a wage on a payroll, this is taxed as you go throughout the year – (HMRC still expect this info on your tax return though. Don’t worry, you won’t be taxed twice!)
For most other earnings, you haven’t yet paid tax, and this is what the return is for. To tax all that rental income, dividend income etc, that you are yet to pay tax on.
How much tax will I pay?
This will all depend on your “total income”. Add up everything you earn in the tax year (6th April 2019 to 5th April 2020).
This will then tell you which band you fall in to:
- Personal allowance – 0% – up to £12,500
- Basic rate – 20% – for total earnings between £12,501 and £50,000
- Higher rate – 40% – for total earnings between £50,001 and £150,000
- Additional rate – 45% – for total earnings over £150,000
Dividends are taxed at different rates to those above!
- Basic rate dividends – 7.5%
- Higher rate dividends – 32.5%
- Additional rate dividends – 38.1%
Dividend allowances
You can receive up to £2,000 of dividends each tax year, completely tax free!
Marriage allowance
If you are married, and your partner received income of under their allowance (£12,500), it may be possible for them to transfer £1,250 of it to yourself – reducing your tax bill by up to £250.
Where can I help get with this? Is it expensive?
Get in touch with us, where once of our experts can take care of it all for you. We will even deal with HMRC for you!
Our aim is to make this as quick and easy as possible for you. Everything is done digitally online, so no need to post us lots of papers, or trek all the way to our offices!
As an example, our basic Tax Return fee would start at just £160 + VAT – all in! All done for you, from start to finish.
We tell you how much tax to pay, making sure we have reduced it as much as we can, and that’s it, done!
Get in touch today, and enjoy Christmas, knowing there won’t be any nasty surprises!
