Self-assessment Tax Returns and Penalties

You may think your accountant seems keen when requesting your tax return information this time of year. “we have ages yet before the deadline”

But HMRC have announced a new penalty regime.

It’s not all that long ago that filing a tax return late simply led to a £100 penalty - and only if there was any tax outstanding. However, this loophole was closed. Now, filing a tax return late can be extremely expensive for you.

There will be a £100 penalty if the return is late, regardless of whether any tax due is paid on time. 

Other things to think about:

• The standard deadline for electronic returns is 31 January following the end of the tax year. However, if you are new to self-assessment, the deadline could be later depending on when you receive a notification to file. There will always be at least three months from the date the return is issued.
• If you prefer to pay any tax owed via your PAYE code in a later year, the return has to be filed on or before 30 December.

And it gets more expensive:

• If the return remains unsubmitted three months after the deadline, HMRC starts to apply a penalty of £10 per day, up to a maximum of £900.
• The next step up comes at six months and twelve months late, where on each occasion you will be charged the greater of:
• £300; or
• 5% of the tax owed.

So, a return filed just over one year late will attract penalties of at least £1,600.

Rather than letting the months slip away, maybe it is a good idea to get your information ready for your accountant, sooner rather than later.