Expert warns of ‘penalties’ for Britons who miss urgent tax deadline

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Those who are self-employed or currently have untaxed income are expected to file their self-assessment tax return (SATR) by January 31 for the 2021/22 tax year. However, millions fall short of the strict deadline every year, which can result in a hefty charge.

According to new research from Handelsbanken Wealth & Asset Management, more than 600,000 self-employed people think they will miss the deadline for completing self-assessment tax returns and paying any money owed for the 2021/22 tax year.

Data from HMRC revealed that a week before the deadline (January 24), around 3.4 million were still yet to file returns for this tax year and it is expecting 12 million returns in total compared with 10.8 million for the 2020/21 tax year.

Handelsbanken Wealth & Asset Management’s research also found young men aged between 18 to 34 are most likely to believe they will miss the deadline, with 13 percent of them admitting to fearing they won’t respond in time.

Joanne Thorne, technical compliance manager at SJD Accountancy, said: “We are urging anyone who is required to complete a self-assessment tax return to do so before the end of January to avoid paying an unnecessary and ultimately avoidable fine to HMRC.”

Ms Thorne continued: “Every year so many people leave it to the last minute or miss the deadline altogether, and official figures from HMRC showed that more than two million people were late with their submissions in 2022”, before adding that there are “a number of scenarios” which may occur for those who miss the deadline.

What happens if I miss the self-assessment tax return deadline?

For those who are even a day late submitting their SATR, Ms Thorse said: “There will be an immediate penalty of £100.”

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Those who still have not submitted their SATR three months after the January deadline will then be required to pay an additional penalty of £10 a day for a maximum of 90 days.

Ms Thorne continued: “If the SATR has not been submitted within six months, further penalties will be charged at a rate of five percent of the tax you owe or £300 (depending on which is greater) and for anyone who does not submit it within 12 months, the same penalties apply.

“In some cases, you may need to repay 100 percent of the tax owed. Late payment interest can also be incurred on top of this.”

Alongside penalties for sending the tax return late, there are also penalties for actually paying the tax late.

Ms Thorne said: “If you are 30 days late, you’ll have to pay five percent of the tax owed at that date, at six months you’ll pay a further penalty of five percent of the tax owed at that date, and a further five percent if you have still not paid at 12 months.

“With this in mind, it’s advisable to pay at least a portion of the tax owed – as much as you can afford – to help reduce the overall bill and thereby reduce the penalty charge.”

However, she notes that those who may be unable to pay their tax bill could have the option of setting up a Time To Pay (TTP) agreement with HMRC, allowing them to repay it in instalments.

To be eligible for a TTP agreement, Ms Thorne said people must:

  • Have filed their latest tax return
  • Owe less than £30,000
  • Apply for a TTP within 60 days of the payment deadline
  • Commit to paying off the debt within the next 12 months
  • Do not have any other payment plans or debts with HMRC.

She added: “If you’re yet to submit your SATR, it’s advisable you do it as soon as possible to avoid these unnecessary penalty charges.

“Forward planning is crucial when it comes to organising your tax affairs and will help avoid any unwelcome or unexpected tax bills. This allows you to be aware of any tax liabilities, meaning you can better plan your future finances.”

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