Don’t forget to do these five things before tax year end

Up to 30 million people can reduce their taxes by taking simple steps before the tax year ends on 5 April 2022.

It’s nearly the end of the 20201/2022 tax year and there are five things you should make sure you’ve done before it concludes. This will ensure that you don't miss payment dates and any deadlines to claim important allowances and reliefs.

They are:

1. Pay your 20/21 tax bill
2. Reduce your tax bill
3. Make any back claims you may have missed -
4. Make sure you’ve submitted your 20/21 tax return
5. Get ready to submit your 21/22 tax return

Pay your 20/21 tax bill by 1 April

If you owe money to HMRC for the 2021/20 tax year, HMRC has said that no-one will incur a late payment penalty if they pay or get in touch to make payment arrangements by 1 April. If you cannot pay it in full, you can apply to set up a payment plan on the HMRC website to spread the cost of the bill into manageable monthly instalments. You can however only do this if you owe less than £30,000 and your tax returns are up to date. Therefore anyone struggling with tax payment should reach out to HMRC before 1 April 2022, in order to avoid the possibility of a further 5% penalty being added.

Reduce your tax bill

There are a number of things that you can do to reduce your tax bill legitimately:

– this is a good cause but it can also help reduce your tax bill. If you’re a UK taxpayer, Gift Aid allows charities to claim the basic rate of tax of 20% on your donation. This means that a £1 donation is worth £1.25 to the charity. If you’re a higher rate taxpayer, you can also claim back the difference between higher rate and basic rate tax on the value of your donation. For a 40% rate taxpayer, that means for every £1 you donate, you can claim back 25p in tax relief.

for the 2021-22 tax year, everyone has an ISA allowance of £20,000 and if you don’t use your annual allowance before the end of each tax year, you’ll lose it, and it will start anew on 6 April. The tax year end falls over Easter weekend this year so check when your provider’s ISA payment deadline is as it may be as soon as Thursday 1 April.

- pensions are a tax-efficient way of saving for your future retirement because you get a top up equal to basic rate tax relief of 20% on anything you pay into a pension. If you pay £80 into your pension, the government will add an extra £20, making a total amount of £100 that goes into your pension pot. If you pay tax at higher or additional rates, you’ll also be entitled to further tax relief on your contributions.  You get tax relief on up to 100% of your annual earnings, up to a limit of £40,000 or lower if your income is over £240,000. In the past, there have been rumours about the government looking at the possibility of reducing tax reliefs available for pension contributions. However, nothing changed in this year’s Spring Statement. This might change in the future so if you want to ensure you lock in the benefits of the tax relief available in this year you might want to explore options for making additional contributions before 5 April.

If you think you overpaid tax before 5 April 2018, make any back claims you may have missed

There’s a four-year time limit for claiming tax back. So, if you think you overpaid tax in the year to 5 April 2018 you must make a claim to HMRC by 5 April 2022. Therefore, if you think you’re entitled to any additional employment expenses from that year, or you want to apply for the marriage allowance, or if you received a PPI pay-out in that year, on which tax would have been deducted from the interest element, then you need to make a claim quickly! If you want to claim for these things for the years after 2018 then there’s not such a rush as you have more time to do this.

Make sure you’ve submitted your 20/21 tax return

HMRC has said that they won’t discuss time to pay arrangements with anyone who doesn’t have their tax returns up to date and further late filing penalties will become due if the return is still not submitted after three months. If you needed to send in a 2020/21 tax return and you haven’t done this, we’d urge you to do this as soon as possible.

Get ready to submit your 21/22 tax return

Obviously, you can do your tax return as soon as 6 April but, if you are not one of those keen beans, we do urge you not to wait until 31 January 2023 to file. Even though April seems super early to submit your 2021/22 tax return, in reality it’s never too early to start getting organised. untied can help you take control of your taxes throughout the year and shows how much you owe so can file your tax return at any time without any deadline stress. It’s best to keep accurate records of income and what you've claimed as business expenses throughout the tax year so that everything is in order. You may also find it helpful to use untied's tax return checklist.

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