The fiscal year 2021-2022 is approaching. For those without PAYE income, this means staying in business as usual in the face of truly unprecedented economic uncertainty.
However, this is easier said than done when faced with constantly changing tax laws and penalties from the HMRC in the event that you incorrectly complete your self-assessment tax return. This is why it is important to set specific tax dates before April 2021 if you plan to stay on the side of the tax authorities.
The most important dates of the fiscal year 2021-2022 include April 6, 2021, the start of the fiscal year, and the payment, registration, and filing deadlines of July 31, October 5, October 31, and October 31. January. Read on to learn more about each of them and what qualifies for income tax.
April 6, 2021 - Beginning Of the New Fiscal Year
April 2021 marks the start of the new fiscal year. Changes to tax-free personal benefits generally take effect on April 6 of each year. The personal allowance is £ 12,570 for the 21/22 tax year.
You can also get your new tax code for this year. The digits in your social security number indicate the amount of tax-free income you are entitled to in that year. This means that they can change every year. Therefore, it is important that you verify its authenticity upon receipt. Otherwise, you risk overpaying or facing an avoidable bill.
It is also a great opportunity to organize your paperwork for your next tax return. While it's not due until January 2022, having your documents and receipts ready will help you prepare and file your tax return early to avoid the stress of last-minute panic and uncertainty about the taxes you'll have to pay.
July 31, 2021 - Pay Period In Fiscal Year 20/21
Speaking of taxes, many people make the second payment to their account in July.
Deposits are prepayments on your next tax bill. It is calculated on the basis of the previous year's tax invoice. The reason for these two payments is to cushion the blow to those who would have had to pay a large sum in January.
Currently, you can make this payment by postal check, via the HMRC online portal or via BACS from your online banking system.
October 5, 2021: Deadline to Register For The Self-Assessment
October 5th is the date you need to register for the self-assessment. There are three ways to do this, depending on who you are:
· Independent (initial request)
· Employer (provided above)
· Not autonomous
If you are now self-employed and have never submitted a self-assessment, you must register first. Upon receipt of your registration, HMRC will send you a letter with your unique 10-digit social security number, which you can use to set up your account for the online self-assessment service.
Once the application is submitted, the HMRC can determine the income tax and national insurance taxes due. For self-employed workers who have already submitted a self-assessment declaration, they must complete the CWF1 form.
For those who are not self-employed and have an income outside of PAYE, they will need to fill out an SA1 form stating that they have taxable income. This applies to one of the following sources of income:
1. Income from work
2. Retirement income
3. Savings interest
4. Rental income
5. Unemployment insurance
6. Trust income
October 31, 2021: Tax Return on Paper
Although this is an outdated reporting form, a large number of UK taxpayers continue to submit their tax returns on paper and by post. However, the deadline for this method is three months before the Internet. This means that if you miss the deadline for printing, you have a second chance at digital submission.
It's also worth noting that physical repositories will be phased out, so it's worth considering digitizing as soon as possible.
January 31, 2022 - Deadlines for Digital Tax Returns And Deadlines For Paying Taxes
After all, the latest deadline for this year is when the majority of UK taxpayers (10.4 million customers) submit their self-assessment reports online.
How to Prepare for Taxes in 2022 - An Advice to Tax Advisors
It is now imperative that the tax advisors and tax accountants should encourage their clients to proactively plan for 2022 in order to effectively meet their tax obligations.
With the pandemic issue rising, any rate hike would have a significant impact on the economy and thus the taxpayers.
For us the most important areas we should discuss with clients as a priority are the following five main considerations:
1. Is A Pension Reform In Sight?
There is growing speculation that pensions could be number one on Chancellor Rishi Sunak's list of tax breaks for the next family and it's easy to see why the pension tax break is the most expensive of all and the Kingdom United over £. will cost 1.38 billion in 2018-19.
Due to the possibility of changes to the retirement tax credit, financial advisors should advise clients on how to maximize the benefit of existing benefits before making changes.
2. Can Investments In EIS And APV Be Successful?
Because it's not suitable for most people, consultants with clients who might benefit from a business investment plan often underestimate investing in venture capital funds.
In the past year, for example, these funds have seen higher inflows than ever, despite the Covid context. Clients may not be familiar with these products or their personal suitability to invest in EIS and VCT, so financial advisors should proactively contact them to discuss them if necessary.
3. Preparation for CGT Swab Removal / Release
In the next budget, the consultant can cancel or limit the capital gains tax credit on the client's primary private residence. In the fiscal year 2018/19, the National Audit Office reported that this exemption had cost the Treasury £ 26.7 billion.
It can also increase current property tax rates by up to 28%, with general income tax (CGT) rates equal to the income tax rates.
Due to the lack of transparency about potential changes in CGT, consultants need to be flexible in addressing this challenge, recommending an appropriate range of options to their clients and explaining the implications of each potential change.
4. IHT: Create Order
With ongoing investigations into UK revenue and property customs taxes slowing during the pandemic, taxpayers have a unique opportunity to get their affairs in order before the new fiscal year.
This area is often overlooked and misunderstood by people at best. Therefore, it is important that financial advisors help their clients make the most of this opportunity and make sure they are aware of the implications for your family's finances.
5. Will a “Wealth Tax” Soon Become A Reality?
It is not inappropriate for a consultant to consider one-time payment or pending wealth tax.
The one-off 2% tax on household equity in the UK, estimated at around £ 15 trillion, would generate the £ 300 billion needed to cover the costs of the Covid-19 crisis, according to the Center for Future Economics Research. in Manchester.
This new initiative cannot be called a "wealth tax", but is rather designed as a supplement to the NHS, which would apply to all income taxes and CGT taxes from 1 to 1.5 percent, for example, and it could be further reduced so that customers with higher income or wealth have a higher percentage.
Given the huge public spending last year, the Chancellor is likely to target taxes as a means of covering the costs of the loan. Before making these changes, however, financial advisors need to be proactive in engaging their clients to avoid the risk of losses.
Contact us for help with your taxes!