Self-Assessment Tax Return (SATR) Deadline Reminder

Dear Clients,

Under current rules, the annual allowance for tax relief on pensions this tax year is £40,000.

There is also a three year carry forward option for any unused reliefs in those past years, while the lifetime limit for tax relief on total pension contributions is currently £1,073,100 which is due to remain in force until at least April 2026.

You can potentially obtain tax relief on private pension contributions worth up to 100% of your annual earnings subject to the overriding limits quoted above.

Remember, tax relief is paid on pension contributions at the highest rate of Income Tax paid which means that: –

A basic rate taxpayer can save 20% tax

A higher rate taxpayer can save 40% tax

An additional rate taxpayer can save 45% tax

If you are an employee making pension contributions, the first 20% of tax relief is usually automatically applied by your employer with no further action required by you unless you are a higher rate or additional rate taxpayer in which case you can claim back the additional tax relief owed via your Self-Assessment Tax Return.

Self-Assessment Tax Return (SATR) Deadline Reminder

Anyone who is required to submit a SATR for tax year 2021-22 and has not yet done so, please note the deadline of the 31st January is getting closer. Please remember that payment of any tax due should also be made by this date which will include the balance of any payment due for tax year 2021-22 plus the first payment on account due for the current tax year 2022-23.

If you are filing online for the first time you should ensure that you register to use HMRC’s Self-Assessment online service as quickly as possible as it may take up to 10 working days for your activation code to arrive by post and with further potential strike action a possibility, there is no time to lose.

If you miss the filing deadline, you will usually be charged a £100 fixed penalty which applies even if there is no tax to pay or if the tax due is paid on time. Subsequent failure to have submitted a return and paid the tax due by the 1st May 2023 will result in additional penalties of £10 per day up to a maximum of £900, although additional penalties may also be charged if the return and payment due remain outstanding after this.

Last year, of the 12.5 million taxpayers required to complete a Self-Assessment return, more than 2.3 million missed the deadline!

Whether your business structure is a sole trader, partnership or limited company, today’s tax rules have never been more complex and you may find that delegating this potentially stressful and time-consuming task to a professional accountant will prove invaluable and actually save you both time and money, while allowing you to focus all your creative energy on what you do best, generating profits.

Happy New Year!