Monday, April 5th 2021 is the last day of the 2020/21 tax year. The tax year-end brings lots of deadlines with it, both in business and personal finance. Let's have a look at some of the things you might need to do before the end of the day on April 5th!
Get Your Accounts Ready
The tax year-end means a new one will begin. This means you will be able to file your tax return, should you need to. This is important to declare your earnings and submit however much tax you owe. This year has been awful messy though. People have lost jobs, started new ones, had grants, been given SEISS payments, taken bounce back loans and so much more. All whilst trying to stay safe during a pandemic. Your figures might be all over the place. Of course, you have until January 2022 to get your tax return filed, however, the sooner you get on top of it, the less chasing around just after Christmas you'll be doing. If you need a bookkeeper to help, please do get in touch.
This tax year-end is also the deadline for claiming tax that was overpaid for the 2016/17 tax year. This will have been via self-assessment. Now is the time to claim it, if you haven't already! Get your cashback if it's owed!
For businesses, now is a great time to check your office supplies and purchase any assets before the next tax year. It's also a good time to check your insurance cover. You might be able to reduce your Corporation Tax liability by reviewing salaries and giving bonuses to staff. There are likely things you'll be considering doing next month. If you can do this now you will maximise your company's outgoings.
Look At Your Savings
Many people have had to dip into their savings this year, some don't have any at all. Whatever your situation, the tax year-end brings with it a lost opportunity to make use of tax-free savings. If you haven't used your ISA amount of £20,000 tax-free, you'll lose it. This cannot be carried over so come April 6th and a new tax year, you'll start eating into a new allowed amount of £20k.
First-time buyers can put £4000 away into a LISA (Lifetime ISA) each year. You could put in £4k on April 5th and another £4k on April 6th. But if you forget to use that 2020/21 allowance, it will be gone. The 25% bonus top-up from the government will also be gone. There are is also tax relief on Junior ISAs and Junior SIPPs.
You can also gift £3000 each year without incurring Inheritance tax. This is one way you can lower how much IHT will be paid on your estate in the case of your death. These smaller amounts will lower than tax and also help your family out if they need the money now.
As you can see, there are lots of things to think about before the tax year-end. A great idea is to make a notification on your phone for a couple of weeks before the tax year-end, maybe around mid-March. This can help give you the time to organise things, rather than running around last minute before the deadline. Maybe do this as a recurring notification for next year and beyond.
The 2020/21 tax year has been very strange and uncertain. Let's hope for a less chaotic 2021/22!