One in four taxpayers still have to file their annual tax return or face a £100 penalty with only one week to go until the self assessment deadline
HMRC has warned that 3.8m people still have to file their tax return by 31 January, up on last year’s figure of 3.4m at the same date. An estimated 12.1m taxpayers have to file under self assessment rules, and so far 8.3m have filed online for the 2022-23 tax year.
It is important to file by the deadline or face an automatic £100 penalty, which was paid by an estimated 2.7m taxpayers last year.
Dawn Register, head of tax dispute resolution at BDO said: ‘There could be tens of thousands of people who will have been drawn into the self assessment tax net for the first time in the 2022-23 tax year. Many may be unaware of their obligations to file a tax return before 31 January 2024 and could run the risk of penalties.
‘These new filers could include parents claiming child benefit whose salaries crossed the £50,000 threshold for the first time in the 2022-23 tax year and who will have to repay some or all of their benefit through the high income child benefit charge.
‘They might be higher earners whose salaries topped £100,000 or pensioners who earned more than their savings allowance because of rising interest rates. Alternatively, they could be working people whose side hustle earnings were above £1,000 during the tax year.’
Due to pressure on HMRC phone lines, the availability of call agents has been reduced and only complex enquiries will be dealt with over the phone. All other enquiries will be directed to HMRC’s online services.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘If you are a self assessment taxpayer, now is the time to take action and get your return done. People can familiarise themselves with the process by checking out HMRC’s online resources on gov.uk.’
For anyone unable to pay outstanding tax in full, it is possible to set up a time to pay arrangement online, without speaking to HMRC, if less than £30,000 is owed.
When completing a return, it is important to ensure bank account details are included, so that if HMRC needs to make a repayment, they can do so quickly and securely without needing to issue a cheque.
The penalties for late tax returns are:
• an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
• after three months, additional daily penalties of £10 per day, up to a maximum of £900;
• after six months, a further penalty of 5% of the tax due or £300, whichever is greater;
• after 12 months, another 5% or £300 charge, whichever is greater.
HMRC will consider a taxpayer’s reasons for not being able to meet the deadline. Those who provide a reasonable excuse may avoid a penalty.
There are also additional penalties for paying outstanding tax late. These are 5% of that unpaid at 30 days, six months and 12 months. Interest will also be charged on any tax paid late.
It is important to let HMRC know of any changes to personal details or circumstances, such as a new address or name, or if you have stopped being self-employed or your business has closed.
Anyone who thinks they no longer need to complete a self assessment tax return for the 2022 to 2023 tax year, should tell HMRC – so that they can issue a withdrawal notice – before the deadline on 31 January 2024 to avoid any penalties.
Customers need to be aware of the risk of falling victim to scams and should never share their HMRC login details with anyone, including a tax agent, if they have one.
