The 31 January Tax Payable Deadline
In each calendar year, 31 January is perhaps the taxpayer’s least favourite. The ongoing pandemic has put extra pressure on cash flow and therefore it’s important to more carefully assess the tax due to determine whether it can be managed.
This article concentrates on the actual amount payable, and will be followed with a second article where we examine managing the process of paying the tax, including use of Time to Pay arrangements.
In our view, the following scenarios may mean that your 31 January 2021 tax payment is overstated:
- Your business profits have fallen in the current year when compared to the year forming the basis of your 2019/20 taxable income
- Your business has creased trading in the 5 April 2021 tax year or has suffered huge financial issues caused by the pandemic and/or poor trading
- Your other income from investments, such as property has been reduced
There are other matters which may have an impact, but the above points are the main issues. Whilst tax repayments are great to receive, it is often an indicator of tax overpaid in the first instance. Now more than ever, cash is king, so our advice would be to check your 31 January 2021 liability closely with your accountant.
In our next article, we will look at the process of managing your January tax payments.