The deadline for submitting a tax return to His Majesty’s Revenue and Customs is rapidly approaching, and millions of people have yet to complete theirs.
With just two weeks to go before all self-assessment tax returns must be filed, it is important to make sure that you won’t get stung by a fine from the tax office.
Last week, HMRC said there were still 5.4million people who had yet to file their self-assessment tax return – despite some 4,400 filing their tax return on Christmas Day.
This is Money reveals what you need to know to ensure you are registered and have your return completed before the deadline arrives on 31 January.
Deadline: Online tax returns must be submitted to HMRC by midnight on 31 January
When is the deadline and do I have to file a tax return?
For those submitting an online tax return, it must be submitted by midnight on January 31. This is for the tax year that ended on 5 April 2024.
If you were hoping to complete a paper tax return and haven’t yet done so, you have unfortunately missed the deadline. Paper tax returns had to be submitted by 31 October last year.
You might not be sure whether you are required to file a tax return or not.
You must submit a return if you were self-employed and made more than £1,000, if you were a partner in a business partnership, had a total income above £150,000, had a capital gains tax liability or had to pay the high-income child benefit charge.
You will also need to file a return if you made untaxed income from renting out a property; commission; income from savings and investments above a certain level; or foreign income.
If you haven’t submitted a tax return before, and need to do so this year, you would have needed to register for self-assessment back in October. If you failed to do so then you may receive a ‘failure to notify’ penalty, which will be a percentage of the tax you owe.
A non-deliberate failure brought to HMRC within 12 months of the tax being due would result in a penalty up to 30 per cent of your liability. A deliberate and concealed failure could see you charged up to 100 per cent of your tax liability.
If you are unsure whether you need to submit a tax return, you can check if you need to using HMRC’s website.
If you submitted a tax return last financial year but believe you no longer need to, then you need to tell HMRC, and they need to agree to this, before the tax return submission deadline on 31 January.
If HMRC hasn’t agreed that you don’t need to submit a tax return, then you you will still need to complete and submit one even if you don’t owe any money – otherwise you could incur a penalty.
Filing a tax return can also allow you to pay voluntary National Insurance Contributions, prove you are self employed to claim allowances such as tax-free childcare, or claim income tax reliefs.
What happens if you don’t file a tax return on time?
‘Filing on time is absolutely critical if you want to avoid being hit with a penalty,’ Paul Falvey, tax partner at BDO, said.
If you are required to file a return, and you fail to do so by the deadline, HMRC will slap you with a £100 penalty.
Even worse, if you fail to do so for more than three months, the fine will begin to increase by £10 per day up to a maximum penalty of £900.
‘If you owe tax and are even later in filing, the penalty costs start to mount up quickly,’ Falvey said.
At the six-month mark HMRC will begin charging a further penalty of the greater of five per cent or £300.
At 12 months, they will add a further five per cent or £300.
On top of this, HMRC may charge late payment interest at 7.25 per cent, which will increase to 8.75 per cent from April this year.
Seb Maley, chief executive of Qdos, said: ‘What’s more, unfiled, late or incorrect tax returns can increase the likelihood of being investigated by HMRC.
‘Doing everything you can to meet this month’s deadline and submit an accurate tax return is vital.’
Can I appeal a penalty from HMRC?
Luckily, HMRC does allow you to appeal a late payment penalty, providing that you have a ‘reasonable excuse’.
For example, if a partner or close relative has died shortly before the tax return deadline, if you had an unexpected hospital stay, or were dealing with a serious illness.
Other excuses deemed reasonable include issues with the HMRC online service, unpredictable postal delays or potentially that you did not know your legal obligation to file a return – though whether this will be acceptable depends on your specific case.
If HMRC agrees that you have a reasonable excuse for missing the deadline, and your fine is waived or amended, you will still have to submit your return as soon as possible.
Generally, you have 30 days from the date you were issued the penalty to get in touch with HMRC or issue and appeal.
You can appeal a penalty charge using HMRC’s SA 370 form.
However, if HMRC does not agree you have a reasonable excuse, you can elevate your appeal to the First-tier Tribunal to make a decision on your case.
It is worth considering that when escalating your appeal you could end up paying your own legal costs as well as HMRC’s.
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