Uhrg, January. It’s cold, it’s grey, and it’s tax deadline day. But never fear, Dinghy’s here. And once again, freelancers, we’ve got your back, with our handy guide to all the important tax dates for 2022.
One of the best ways to stay on top of your taxes and freelancer finances is to plan ahead. Know what the key dates are throughout the year, and you can prepare early and keep good records so that when those deadlines hit, getting it sorted is a breeze. Let’s dive into the calendar to see what lies ahead.
This is the key tax deadline date that all freelancers should know. This is the deadline for the return of your Income Tax Self-Assessment form, if you’re submitting it online. The records and figures you submit here cover the tax year from 6th April 2020 – 5th April 2021 – also known as the 2020/21 tax year. This is also the deadline for paying your income tax for that year, Class 2 and Class 4 National Insurance contributions and any capital gains tax. If you miss the filing deadline, there is an automatic late penalty of £100. However, HMRC have said that due to COVID disruption, you can submit 20/21 tax returns up to 28 February 2022 without getting a late filing penalty. It’s very rare for HMRC to make exceptions like this so don’t expect this to happen in future years!
Many freelancers are also required to make advance “payments on account” for the current tax year (2021/22). This is likely to apply to you if your last Self-Assessment tax bill was more than £1,000. If this is the case, your first payment for the tax year 2021/22 will be due on this date as well. Each payment will be half your previous year’s tax bill. If you know that your tax bill will be lower than last year, you can ask HMRC to reduce your payments on account.
If you still have tax and National Insurance owing from your 2019/20 tax bill (ie. the one that was due last January) by this date, HMRC will add another 5% penalty. That’s why it’s important to keep track of all the key deadlines and payments when you’re self-employed.
This is where the fines usually start to rack up if you’ve not paid your tax and NI due from this January – any unpaid liabilities for 2020/21 should get a 5% penalty from this date. However, again because of the pressures of COVID on small businesses, HMRC have announced a waiver which means that if you pay your tax in full, or set up a Time to Pay arrangement by 1st April, you won’t receive a late payment penalty on this occasion. You’ll still owe interest on top though, so it’s better to get it paid up if you can.
If your business is VAT registered, this is the date by which you have to join the Making Tax Digital system. For most freelancers, this won’t yet be a requirement, but it is due to come into force in 2024, so it’s a good idea to familiarise yourself with the new guidelines – find out more in our blog. If you’re taking advantage of the COVID extension to the tax payment deadline, you need to make sure you’ve paid up by today.
This is the final day of the tax year. It’s your last chance to use any personal allowances for income tax. It’s also your last chance to use up your annual ISA allowances.
Happy New Tax Year! Make sure you update your records from today to reflect the fact that we’re in a new tax year.
If your Income Tax Self-Assessment form for 2021/22 is still outstanding by this date, HMRC will start to apply a daily £10 late filing charge – ouch!
If you’re required to make payments on account for your income tax and Class 4 NICs, the second payment for the tax year 2021/22 is due by today. It’s usually half of last year’s tax bill. You will then pay a “balancing payment” in January 2023 for any remaining tax and student loan contributions.
If you still haven’t paid the money owed from your 2020/21 tax bill by today, you’ll get hit with another 5% penalty, on top of the one you accrued in March.
If you know you need to file an Income Tax Self-Assessment form for 2021/22, but have not yet received notice to file from HMRC, you should get in touch with them to tell them you need to declare income. This might apply, for example, if you started freelancing during that tax year and have not let HMRC know about your self-employment. It’s best to be proactive about your freelancer tax so you can get your return sorted early and not leave it until the last minute!
This is your deadline for submission if you use a paper form for your Income Tax Self-Assessment. People filing online have until 31st January.
If you owe less than £3,000 tax, and you want HMRC to collect it through your future PAYE code, you can apply for this to happen if you submit the request by this deadline. This might be useful if you are leaving freelancing for a salaried role or if you do a little bit of freelancing on the side of a PAYE employment role.
The key tax year dates for freelancers in 2022
That’s a run-down of some of the key red-letter days for freelancers who are looking to get their head around taxes. Remember that this article isn’t financial advice, and if you need any help sorting your business bookkeeping and tax arrangements it’s best to speak to someone qualified, like an accountant. The dates here also assume that you don’t have any employees whose tax and NI you’re responsible for. All dates are based on the latest information available from HMRC at the time of publication but may change in the future.
We’ll admit, it’s hard to get very excited about managing your finances and paying your taxes, but it’s all part-and-parcel of being a freelancer and running your own business. Just like organising your business insurance. All Dinghy freelancer insurance policies are designed with flexible working and the ebbs and flows of freelance life in mind, and unlike a tax return, it’s super simple to set up. Just answer a few quick questions and we’ll send a quote straight to your inbox.