The tax return for 2020/21 must be filed by 31 January 2022. Any tax due is payable by the same date, but in some circumstances, this can be spread over the next tax year instead. Why do you need to act quickly to take advantage of this?
31 January each year is the filing deadline for self-assessment tax returns. Any underpaid tax (taking into account any payments on account) must be paid by the same date, or you can become liable to penalties and interest. However, where the amount owed doesn't exceed £3,000 it's possible to elect to have the underpayment collected through your PAYE code for the next new tax year, i.e. 2022/23 for 2020/21 underpayments.
Obviously, this requires there to be an employment or private pension so that HMRC can apply the adjustment to the PAYE code. However, there is a further condition that must be met before the "coding out" can operate. The tax return must be filed no later than 30 December, i.e. just over a month ahead of the standard deadline. Anyone wishing to have their 2020/21 tax collected via PAYE must file their return within the next week and indicate that they wish to have the tax collected via the PAYE code on the return.
If the deadline is missed, you can apply to HMRC for a payment plan. However, this is likely to be for six months at most unless there are exceptional circumstances, and interest will accrue on the unpaid amounts from 1 February.
Among these was the alignment of CGT rates with income tax rates. Investors will be pleased to know that the government has rejected that proposal. However, in a letter to the OTS, the Financial Secretary to the Treasury has indicated that five of the recommendations will be enacted. Some of these are administrative in nature, but there are two very welcome pieces of news:
• The window for the no gain, no loss exemption is to be extended until the end of the tax year following the year of divorce or permanent separation. This will give former couples at least twelve months to distribute assets between themselves. In contrast, the current rules only apply the exemption in the year of separation, meaning it can be a matter of mere days.
• The rules regarding rollover relief will be extended to reinvestments in land following a disposal made under a compulsory purchase order. These changes remain subject to consultation and draft legislation, so it is unlikely that they will be enacted for 2022/23.
If you have any queries regarding your tax return, please contact us.