Just another Tax Return?
As we are now well into a new tax year, those of you who complete a self assessment Tax Return will be starting the process of gathering the necessary information.
No doubt the information required is similar to the previous tax year; however, this year there are a number of additional things to consider.
Working from home
Firstly, the national lockdowns that were in place throughout the year led to many of us adapting to new working arrangements, predominantly from home. Inevitably, you will have incurred additional costs in for household expenses, such as gas and electric etc, and the good news is that tax relief is available (if your employer has not reimbursed you for these).
HMRC allow individuals to claim tax relief at a flat rate of £6 per week, giving £312 per year. This could give a tax saving of £140 for additional rate taxpayers.
In a change from previous years, it is only necessary to have been required to work from home 1 day throughout the year to be able to claim the full year’s tax allowance.
In addition to the flat rate, there may be tax relief available on other costs incurred on materials necessary for you to work from home.
Self-employed individuals who were adversely affected by the lockdowns may have received payments from the Self Employment Income Support scheme. These payments are taxable with the first three payments being taxed in the 2021/22 tax year regardless of your accounts year end.
It is therefore important that any payments received in the first three trances are included on the Return as there are specific boxes for these and HMRC will no doubt be checking to ensure they match their records.
2nd Payment on account – 31 July 2021
Naturally, nobody wants to pay more tax than necessary. With many people seeing their income drop during the 2020/21 tax year, there may be scope to reduce the payment on account.
This not only affects those who are self-employed with many people seeing a reduction in their investment income. By completing your Return as soon as possible, the second payment on account due on 31 July 2021 can be accurately reduced, helping your cash flow.