As the calendar pages turn and we find ourselves approaching another 31st January, the thought of self-assessment tax returns begins to occupy the minds of many across the UK. At BK Plus, we’re committed to providing clear, practical guidance to help you through this process. Whether you’re new to self-assessment or an experienced filer, our goal is to make this task as straightforward and stress-free as possible.
Who should be completing a self-assessment?
Our self-assessment responsibilities vary based on different financial circumstances. This includes:
- Self-employed individuals or sole traders whose annual income exceeds £1,000.
- Partners in a business partnership.
- Individuals with an annual income over £100,000.
- People liable for High Income Child Benefit Charge.
- Property owners earning rental income.
- Individuals with untaxed income from sources like investments, savings, or foreign income.
- Those who receive capital gains through selling properties, investments, or other valuable possessions.
Each of these categories represents a different aspect of financial responsibility and underscores the importance of thorough and timely tax filing.
Understanding the deadline.
The deadline for submitting your online tax return for the 2022/23 tax year, and for paying any tax you owe, is 31st January 2024. It’s a date that deserves a circle on your calendar. Missing this date, unfortunately, leads to automatic penalties. These fines start modestly but can grow over time, creating an unnecessary financial burden.
What is the cost of missing the deadline?
The cost of missing the self-assessment deadline isn’t just financial; it’s also about the stress and worry it can cause. Here are several financial penalties you could face:
Immediate Fine – Failing to file by the deadline results in a £100 fine.
Daily Charges – After three months, daily charges of £10 accrue, up to a 90-day maximum of £900.
Further Penalties – At six and twelve months, additional penalties are imposed, which could be either £300 or 5% of the tax due, whichever is higher.
Accrued Interest – Late payments incur interest, adding to the financial burden.
The steps to take if you miss the self assessment deadline.
Missing the self-assessment tax return deadline can be unsettling, but it’s important to take immediate steps to mitigate the situation! Here’s what you will need to do…
- File as soon as possible – The first and most crucial step is to file your tax return as soon as you can. Even if you’re late, filing sooner rather than later can help limit the penalties accruing over time.
- Pay your tax due – Alongside filing your return, ensure that you pay any tax that you owe. Like the late filing penalties, late payment penalties and interest can also accumulate, so it’s important to address this promptly.
- Contact HMRC if needed – If you have a valid reason for your delay, such as an unexpected life event, HMRC may be understanding. It’s worth contacting them to explain your situation. They might consider your circumstances and could potentially reduce the penalties.
- Seek professional advice – Professional advice from an accountant or tax advisor can be invaluable in these situations. They can assist you in dealing with HMRC, helping to explain your situation and exploring any possible avenues for penalty reduction.
If you’d like to appeal, here’s what you should do.
If you’ve incurred penalties due to missing the self-assessment deadline, there’s a possibility to appeal against them. The process involves presenting a valid reason to HMRC, known as a ‘reasonable excuse’.
Understanding ‘Reasonable Excuse’
A reasonable excuse is something unexpected or outside your control that prevented you from meeting a tax obligation. This could include:
- Serious illness
- Unexpected hospital stays
- Significant life events such as the death of a close family member
- Technical issues while filing online, such as system failures
How to appeal
The appeal must be made to HMRC, either online or in writing. You should clearly state the reason for your delay and provide any supporting evidence. It’s important to note that the appeal should be made as soon as possible after the penalty has been issued. Generally, you have 30 days from the date of the penalty notice to lodge an appeal. If you miss this window, you may still appeal, but you’ll need to explain the reason for your late appeal.
Documentation and evidence
Providing evidence to support your claim is very important. This could include hospital letters, a death certificate in the case of bereavement, or proof of technical issues if your claim is related to HMRC service failures.
HMRC will review your appeal and make a decision. If they accept your appeal, the penalties may be reduced or waived. If your appeal is rejected, you can request a review by another HMRC officer or take your case to a tax tribunal.
What are the benefits of filing your self assessment early?
There’s a comforting sense of relief that comes with submitting your tax return early. It’s not just about crossing an item off your to-do list; it’s about ensuring accuracy and having ample time to arrange your finances. Early submission means you have more time to address any unexpected tax liabilities or seek advice on how to optimise your tax situation.
Your support in tax matters.
At BK Plus, we understand that everyone’s financial situation is unique. That’s why we offer tailored advice and support. Whether it’s your first time filing a self-assessment or you’re dealing with a more complex tax scenario, our team is here to offer expert guidance and support.