Self-assessment – the year of grants and deferred deadlines

With COVID-19 wreaking havoc, it might be easy to forget your obligation to submit a self assessment tax return for 2019/20 before midnight on 31 January 2021.

While that may seem a while off at the time of writing, it’s important to be aware of your responsibilities following an unprecedented year.

Some self assessment dates were deferred to help businesses and individuals cope with the financial implications of COVID-19.

More than 2.7 million self-employed income support grants were issued in tranche one, and they help form your estimated earnings for 2020/21.

These valuable government schemes have been lifesaver for some, while adding another layer of complexity for self-assessment taxpayers.

We take a look at the key dates and deadlines approaching us in the run-up to 31 January 2021.

Register for self assessment

Around 151,000 people registered as self-employed since 6 April 2019, according to the Office for National Statistics. If you were one of those, you need to register for self assessment by 5 October if you haven’t already done so.

This usually applies to sole traders or business partners who became self-employed between 6 April 2019 and 5 April 2020, and earned more than £1,000 in that time.

It might also apply to other taxpayers with high income or complicated tax affairs between those dates. HMRC has an online tool allowing you to check if you need to register for self-assessment.

July payment on account

Taxpayers already registered for self assessment had the option to defer their second payment on account, usually due by midnight on 31 July.

Those of you who took up that deferral option in July were asked to make this payment on account on or before midnight on 31 January 2021. Chancellor Rishi Sunak has since delayed this until 31 January 2022.

Be aware, this is also when a balancing payment for 2020/21 will be due along with the first payment on account for 2021/22.

It is possible to settle your July 2020 payment on account any time between now and 31 January 2022.

January payment on account

If you are one of the recipients of a self-employed income support grant, you will need to factor this into your January payment on account.

The amount you received from the Government – in tranche one, two, or both – is taxable for 2020/21 at your marginal rate.

We will use this figure to calculate your estimated earnings, from which we work out your first payment on account for 2020/21. This then goes to HMRC as the first instalment of your income tax bill.

Of course, you can bring or share your records with us to process and upload in plenty of time. For expert help or more information about our personal tax service, contact us on info@stapletonsaccountants.co.uk or call 01363 773191.