Many people who breathed a sigh of relief when the Government announced a self-assessment tax holiday in July should pay up now, said leading tax and advisory firm, Blick Rothenberg.
Andy Sanford, a partner at the firm said: ‘Many taxpayers will be taking advantage of the self-assessment tax holiday that they were given. However, this is a tax deferral measure, rather than relief and this will have to pay in January. There are three groups of taxpayers for whom taking the tax holiday maybe not be the right course of action.
‘If you are a partner in an LLP or partnership, and your firm makes your tax payments for you, then you are risking that the firm will be sufficiently solvent to make the payment in January. The tax liability is the responsibility of the individual, so if you have any concerns, you should press for the tax bill to be paid in July.’
Sanford added: ‘The second group of taxpayers are those who are spenders. They should bear in mind, that in the first three months of 2021, the self-employed will have to make not only two self-assessment payments but also make two VAT payments, catching up on the deferred VAT payment from earlier this year. This will require careful budgeting. For some, it may be simpler to pay the liability now if there is spare cash.’
He noted that: ‘Finally, there are a group of taxpayers, who may have either been unaffected or in an industry that has seen an increase in trade through the pandemic. They may simply feel it is not right to take advantage of the deferral. For those who are fearing double tax payments in January, consider getting your tax return finished early this year. Not only will it determine your tax liability for the tax year 2019–2020, but it will also be a sensible point to see if payments on account can be reduced for the 2020–2021 tax year.’
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