TOP 5 Tax Return Questions
We know most people find the tax process uninteresting, complicated and rather stressful but our team of tax nerds simply LOVE simplifying the process. Yep...we’re unashamedly nerdy about this sort of thing!
With 2020 already being stressful enough, we thought it would be a nice idea to pitch the 5 most common questions to our tax nerds so you don’t have to. Of course, as an APARI customer, you’re able to ask them any question you like.
Here are the answers to your 5 most common questions about taxes...
1. Do I need to send a tax return this year?
It depends on what you were doing between 6 April 2020 and 5 April 2021 (also known as the 2020 to 2021 tax year or 2020/21).You will not usually need to send a return if your only income is from your wages or pension.
You’ll likely need to complete a self-assessment tax return if, in 2020/21, you:
Worked for yourself as a sole trader, a business partner or a director of a limited company - even if you had another job as well.
Worked as a sub-contractor in the Construction Industry Scheme (or CIS)
Earnt money from renting out a property
Earnt income from savings, investments and dividends that aren’t held in an ISA.
There are a few more specific criteria and it is impossible to cover them all here. However, you can use this quick and easy tool from HMRC to check if you need to send a tax return: https://www.gov.uk/check-if-you-need-tax-return
2. What's the deadline?
Your 2020/21 tax return needs to be filed by 31 January 2022. You also need to pay your tax liability (any tax owed) by 31 January 2022. Late submission or payment can result in heavy fines, so it’s always good to prepare and submit as early as possible.
Submitting early provides you a clear idea of what you owe and gives you more time to pay. And COVID-19 gives you an extra reason to complete your return early. In September 2020, the government announced that you can apply for more time to pay your 19/20 Self Assessment tax bill, but it is unlikely that a similar scheme will be introduced for 20/21 (except for in special circumstances) - so the earlier you calculate and submit your tax return, the longer you will have to arrange payment!
3. Which documents will I need?
It depends on what goes in your tax return. But for the most common information:
Self-employment: bank and credit card statements; income statements from any apps/platforms/market places you use; receipts for cash expenses.
Property: rent statements; bank statements; receipts for cash expenses.
Employment: P60; year-end payslip; P45.
Construction Industry Scheme: monthly statements from your contractor.
Pension: State Pension letter; P60 or end of year certificate from your pension provider.
Other income: records of income from bank interest, dividends, trusts, etc.
4. I don't think my accountant is good value for money. Do I need them?
Probably not.
For most people, tax returns are easy. But there are big profits in making it seem complicated, scary and not for normal people.
At APARI, accountants have designed our software so that it's simple and still gets your taxes right. If you do get stuck, our tax nerds are on standby to help.
5. What else do I need?
If you decide to submit your own tax return, either manually or using APARI’s SA100 tool. For this you'll need to use your Government Gateway ID and password along with your Unique Taxpayer Reference (UTR).
If you can't find either of these, follow the guidance here: https://www.gov.uk/log-in-register-hmrc-online-services/problems-signing-in
Bonus question: I keep hearing about Making Tax Digital. What is it?
Making Tax Digital, or MTD, is the biggest change to tax returns in a generation. Under MTD regulations, you'll need to use software to keep your business records and submit information to HMRC every three months (so, four times a year).
We’ve put together a short video to help explain the changes.
Two reasons not to worry:
It doesn't apply yet. So you can complete and submit your tax return for 2020-21 as normal and start using MTD software when you are ready.
APARI has a great MTD-ready, HMRC-recognised software product for the self-employed and landlords that you can get started using for FREE. You can even use the tool now to keep digital records, but submit your normal self assessment (SA100) using the APARI software.
For more information on MTD, check out our full-length article here.
Ready to take the sting out of tax?
