March 8, 2021

Market and Financial News Aggregator

Self Assessment Filing Deadlines and IncomeTax Rates 2020/2021

3 min read

When you start a business as self employed, own an investment property, have investment income or own a limited company you need to make sure you are aware of the various tax rates you will pay on your income and when you need to declare your income to HMRC.

In this article we look to clear out the jargon and provide you with a clear understanding of the tax rates and deadlines you need to be aware of if you need to file a self assessment tax return.

Filing Deadline for Self Assessment Tax Returns 2020/2021

The 2020/2021 tax year runs from 6th April 2020 to 5th April 2021, which means you can file your tax return at any time after 5th April 2021.

The deadline for filing your self assessment tax return with HMRC is 31 January 2022.

Failure to file your tax return on time will result in late filing penalties being incurred.

Payment Deadline for Self Assessment Tax Returns 2020/2021

Once you have completed your tax return you should know how much tax you owe to HMRC for the 2020/2021 tax year.

Once you have this figure the deadline for ensuring this tax liability is paid in full is 31 January 2021, however you may have paid some of this tax liability already if you filed a tax return for the 2019/2020 tax year.

If you filed a tax return for the 2019/2020 tax year you may have made a payment on account towards the 2020/2021 tax year on 31 January 2021. You may also have to make a payment on account towards your 2020/2021 tax liability on the 31 July 2021.

If your 2020/2021 self assessment tax return is the first you have had to file with HMRC you will need to pay any tax and national insurance you owe by 31 January 2022.

If you are self employed and your tax liability for the year is higher than £1,000 you will be required to make payments on account in advance towards your next year’s tax liability every 31 January and 31 July.

Failure to pay your income tax on time will result in interest being incurred.

Income Tax Rates 2020/2021

There are different tax and national insurance rates depending on the type of income you receive.

The one tax allowance that everyone receives, across all types of income, is your tax free personal allowance which for the 2020/2021 tax year is £12,500. Please note that your tax free personal allowance decreases by £1 for every £2 of income you receive above £100,000.

Below we have detailed some of the most common income tax and national insurance rates.

Self Employed Tax Rates

Income Tax

Taxable profit up to £37,500                              20%

Taxable profit from £37,501 to £150,000        40%

Taxable profit above £150,001                           45%

National Insurance

Class 2 National Insurance                                £158.60 a year

Class 4 NI:

Taxable profit from £9,000 to £50,000           9%

Taxable profit above £50,000                             2%

Property Income Tax Rates

Taxable profit up to £37,500                              20%

Taxable profit from £37,501 to £150,000        40%

Taxable profit above £150,001                           45%

There is no national insurance on property income.

Dividend Tax Rates

First £2,000 of dividend income                        0%

Taxable profit up to £37,500                               7.5%

Taxable profit from £37,501 to £150,000        32.5%

Taxable profit above £150,001                           38.1%

There is no national insurance on dividend income.

Conclusion

As you can see from the above there are a lot of differing tax rates depending on your type of income, and this article only scratches the surface. Failure to file and pay your income tax on time can also lead to penalties and interest which can quickly escalate.

If you would like a free 30 minute consultation to discuss how Edwards Bailey Chartered Accountants can make sure you are set up in the most tax efficient way, as well as ensure your tax is filed and paid on time contact us on 01708 200675, via email on info@edwardsbailey.co.uk or via our website www.edwardsbailey.co.uk .

Read more:
Self Assessment Filing Deadlines and IncomeTax Rates 2020/2021

Business Matters

2021-02-11 19:18:11

All news and articles are copyrighted to the respective authors and/or News Broadcasters. VIXC.Com is an independent Online News Aggregator


Read more from original source here…

Leave a Reply

Copyright © All rights reserved. | Newsphere by AF themes.