When it comes to paying small business taxes, every sole-trader and small business owner needs to be aware of their responsibilities and ensure they comply with HMRC’s tax regime. Missing deadlines can risk hefty fines and penalties. Moreover, having a better understanding of UK tax rules can help you to save money whether that’s through allowable expenses or relief schemes.
After you’ve familiarised yourself with your tax obligations, there are a number of crucial tax dates you’ll need to factor in to your business planning. To make things slightly more confusing, due to the Covid-19 pandemic many of the typical rules and deadlines around small business tax returns were relaxed. In this guide, we’re going to consider some of the changes impacting on the 2021/22 tax year and outline all the key dates for your diary.
6 April – Start of the new tax year 2021/22
This is when most allowances reset and can also see the introduction of new tax rates, or tax legislation. Due to Covid, and previously agreed rates, the 6 April 2021 sees very little change. If you are self-employed, it will most likely also signal the start of a new financial year and is a great opportunity to set yourself up on some new accounting software. Whilst you’re doing this, it’s the ideal time to look at how you can work more effectively with your accountant and finance team.
31 May – P60 deadline for 2020/21
This is the deadline for issuing a 2020/21 P60 to your employees. It will also need to be issued to yourself if you’ve drawn a salary from your limited company. This document is important if you must file a self assessment as it is the summary of income received and tax paid over the 20-21 tax year.
Using payroll software is one way to make this process much quicker as many will automatically issue a P60 to anyone on the payroll.
6 July – P11d deadline for 2020/21
If you are employed and receive benefits via your employer, you will have received a P11d by this date for the 20-21 tax year. This includes company directors or if you’re registered as self-employed. As with the P60, this is important to keep safe if you have to complete a self assessment tax return.
31 July – Second payment of account for 2020/21 tax year
This is the deadline for your second payment on account for the 20-21 tax year if you submit a self assessment tax return. This will have been calculated when you submitted your 2019-20 tax return and is payable by anyone with a tax bill exceeding £1,000.
Due to Covid, you may have seen a decline in profits, and your payments on account may be adjusted – it may be worth submitting your 20-21 tax return before this date, and double check how much is owed before paying. You can login to your online self assessment account if you need a reminder of how much needs to be paid. If you have an accountant, you will likely find the amount on the paperwork they sent you. And failing that – ping them an email!
5 October – Deadline for registering for Self Assessment for the 20-21 tax year
You can register for self assessment via GOV.UK. If you are already registered for self assessment, but not registered with HMRC as self employed, you will also need to inform HMRC by this date. Failure to register by this date can result in penalties.
31 October – Deadline for submitted paper self assessment tax returns to be received by HMRC
For the majority of those filing a tax return, we would always recommend filing an online return – you are less likely to have any errors, and you get three extra months to file it. Some individuals do have to file a paper return, however, and therefore will have to submit it by this date.
30 December – Deadline for 2020/21 tax year if you owe less than £3,000
If your self assessment tax return bill for the 20-21 tax year is less than £3,000, and you wish to pay your liability through your tax code, you will need to file your online tax return before this date. It can result in fluctuating take-home pay, however, which can sometimes get confusing. Consider whether you would prefer to reduce your take-home pay or pay the tax bill in one instalment.
31 January – Deadline for online self assessment tax for the 20-21 tax year
This is perhaps the most significant tax date for most of you reading this blog, the filing deadline for Self Assessment tax returns. If you’ve earned any income outside of PAYE tax this means you’ll need to submit at tax return. This declares what you’ve earned for the tax year 2020/21, and what tax you need to pay. You can use our self-employed tax calculator to work out how much you’ll owe.
Remember you can file your tax return any time in the tax year so don’t leave it until the deadline.
You’ll also need to put down your first payment on account for the 2021/22 tax year. Each of the payments on account are 50% of your previous tax bill. So, for example, if you paid £3,000 in tax, you’d make one payment on account of £1,500 in January, and another in July.
5 April – End of the 2021-22 tax year
Starting from 6 April, the new 2022/23 tax year will begin. As such, this is the last day in which the rules and regulations for 2021/22 apply – any changes, for example to the personal tax allowance, will commence from tomorrow.
In addition to the above deadlines, do not forget the other key dates that occur throughout the year:
VAT – For those on quarterly VAT schemes, VAT bills are payable 1 month and 7 days after the quarter end. So, if your quarter end is 31 March, your VAT bill is due by 7 May. Please note that if you are on annual accounting, your VAT bill will be payable 30 days from the end of your annual VAT period.
PAYE – Submit RTI to HMRC on or before the date you pay your employees. 22nd of each month – deadline to pay your CIS, NICS and PAYE to HMRC.
Corporation Tax – Corporation tax is due to be paid to HMRC nine months and one day after your year end. The tax return itself is due one year after your year end.
Annual Accounts – for Limited Companies and Limited Liability Partnerships, accounts are due to be filed with Companies House within nine months of the financial year end. You can work out when yours is due using our Corporation Tax deadline calculator. The first financial year is slightly different – the due date for the first set of accounts is 18 months from the date of incorporation.