The 2020-21 tax return deadline for submitting your paper Self-Assessment returns is 31 October 2021. The tax deadline for submitting online returns is 31 January 2022. Late submission of a Self-Assessment return will become liable to a £100 late filing penalty. The penalty usually applies even if there is no liability or if any tax due is paid in full by 31 January 2022.

If you are still submitting paper tax returns, we would recommend that you consider the benefits of submitting the returns electronically. This includes gaining an additional three months (until 31 January 2022) in which to submit your return. You will also receive instant confirmation that a return has been filed and not need to rely on the vagaries of the postal service. 

If you received a letter informing you to submit a paper return after 30 July 2021, then you have an extended deadline which runs for three months from the date you received the letter to submit a paper return.

It is also important to remember that taxpayers are required to declare if they received any grants or payments from COVID-19 support schemes up to 5 April 2021 (i.e., during the 2020-21 tax year) as these are taxable. If you received furlough payments, then these should be reflected on your P60 form. Details of any Self-Employment Income Support Scheme or received Coronavirus Job Retention Scheme grants will need to be included on your Self-Assessment form. The £500 one-off payment for working households receiving tax credits does not have to be reported as part of the Self-Assessment submission.

If you are entitled to the marriage allowance and have not yet applied, then you could receive a payment of up to £1,220 from HMRC. The marriage allowance is available to qualifying married couples and those in a civil partnership where a spouse or civil partner is a non-taxpayer i.e., has an income below their personal allowance (currently £12,570).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) doesn’t pay tax at more than the basic 20% rate of Income Tax. This would usually mean that their income is between £12,570 to £50,270 in 2020-21. The limits are different if you live in Scotland.

If you meet the eligibility requirements and have not yet claimed the allowance, then you can backdate your claim to 6 April 2017. This could result in a total tax break of up to £1,220 if you can claim for 2017-18, 2018-19, 2019-20, 2020-21 as well as the current 2021-22 tax year. If you claim now, you can backdate your claim for four years (if eligible) as well as for the current tax year.

As we mentioned in a recent post, the Office of Tax Simplification (OTS) has released a new video on a number of possible changes to the tax regime. Perhaps the most radical of these ideas relates to the exploration of changes to the tax year end date. The unusual tax year end date of 5 April dates back to the British change from the Julian calendar to the Gregorian calendar in 1752, when the tax year changed to end on 4 April. This changed again in 1800 in recognition of further calendar issues and the tax year was fixed to start on 5 April, a change that has stayed until today. 

The review by the OTS recognises the benefit of adopting a tax year which is either aligned with the calendar year or with a calendar month-end. The review considered the high-level implications of moving the tax year end date to 31 December, and a more detailed evaluation of the implications of a move to 31 March. Changing the date to 31 December would be a more complex move and could also require changing the UK’s financial year. The review did not aim to make a specific recommendation about a change of date.

Commenting on the review, the OTS Tax Director said:

'It’s been stimulating to explore this issue, which has been of long-standing interest to many given the curiosity aroused by the UK’s use of a tax year running from 6 April to 5 April. Despite having carried out our review over a short period, many people have got in touch to share their insights and experience. A clear majority of those responding to us thought that the UK should adopt a different year end – but there was a range of views on whether to move to 31 December or to 31 March. This has been borne out by a range of surveys.'

The proposed changes are complex, and it is now back to the government to consider this issue further. The OTS did suggest that in the short-term the government and HMRC explore using a 31 March cut off to stand in for 5 April in respect of the calculation of profits from self-employment and from property income, ahead of the implementation of Making Tax Digital for Income Tax (now delayed until April 2024).

HMRC has, for many years, accepted that associate dentists are generally treated as self-employed. These agreements have been approved by the British Dental Association (BDA) and the Dental Practitioners Association (DPA) and are quoted in HMRC’s manuals.

HMRC’s manuals state that ‘these agreements relate to dentists practising as associates in premises run by another dentist. Where these agreements are used and the terms are followed, the income of the associate dentist is assessable under trading income rules and not as employment income. In these circumstances the dentist is liable for Class 2/4 NICs and not Class 1 NICs.’

It has now been confirmed that this specific guidance for Associate Dentists will be withdrawn with effect from 6 April 2023, and after this date the status of new and ongoing Associate Dentist engagements should be considered in line with standard employment status checks. 

This change should not impact the self-employed status of the majority of associate dentists but is in line with HMRC’s goal to stop making reference to third party advice in their own guidance. HMRC has also confirmed that they will not be using the withdrawal of the guidance as a reason to open retrospective enquiries into periods prior to 6 April 2023.

There are a number of reasons why a taxpayer needs to complete a Self-Assessment return. This includes if they are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property.

Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a Self-Assessment return needs to be filed.

In certain circumstances, HMRC also asks taxpayers to complete tax returns. HMRC has an online tool that can help taxpayers ascertain whether they are required to submit a Self-Assessment return.

The list of taxpayers that are likely to be required to submit a Self-Assessment return includes:

• The self-employed;
• Taxpayers who had £2,500 or more in untaxed income;
• Those with savings or investment income of £10,000 or more before tax;
• Taxpayers who made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax;
• Company directors – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car;
• Taxpayers whose income (or that of their partner’s) was over £50,000 and one spouse/partner claimed Child Benefit;
• Taxpayers who had income from abroad that they needed to pay tax on;
• Taxpayers who lived abroad and had a UK income;
• Income over £100,000.