Are you aware of HMRC's penalty system for late self-assessment tax returns? These penalties can accumulate quickly, especially during the summer months, putting a strain on your finances. This article aims to clarify the current fines and encourage you to file your return promptly when April 6th comes around to avoid unnecessary costs.
The 2023/2024 tax year will end on April 5th 2024, and filing for that year can begin April 6th, 2024. The deadline to file your online return is January 31st, 2025, while paper returns are due by October 31st, 2024. Here's how the tiered late filing penalty system works:
Late filing penalty: If you miss the January 31st, 2025 online deadline, you'll automatically receive a £100 penalty.
Daily penalties: After 3 months (May 1st onwards), HMRC charges a £10 per day fine for 90 days, up to a maximum of £900. This means missing the October paper filing deadline could result in £600 in fines alone.
Further penalties: At 6 months late, you face an additional 5% penalty on your tax bill or £300, whichever is higher. At 12 months, penalties can reach up to 100% of your tax due.
HMRC may impose penalties for inaccuracies in tax returns, ranging from errors in calculations to omissions of income. The severity of penalties depends on the nature and degree of the inaccuracy. Deliberate inaccuracies attract higher fines compared to innocent errors.
Taxpayers must pay interest on any outstanding tax beyond payment deadlines. HMRC sets the interest rate, which can vary based on economic conditions. The payment deadline is in line with the submission deadline, so January 31st, 2025, for the 2023/2024 year. If tax remains unpaid for an extended period, HMRC may impose additional penalties. These penalties increase with the amount of unpaid tax and the length of the delay.
Unfortunately, HMRC will add these fines to the total tax bill when it comes to payment, and no one wants that, so if you are in this position and would like to get your return filed, please don't hesitate to contact us. We understand that the current cost-of-living crisis might make it difficult for people to prioritize tax obligations. Remember, late filing only adds to the financial burden. Also, in 2023/2024, HMRC will be changing self-employed year-end dates if they do not end on the 5th of April, which will likely lead to a higher tax bill that you should prepare for. To read more, see our other article. I hope this article has explained some complex and daunting tax aspects for you. It's also worth mentioning that even if you file as early as April 6th, 2024, you won't have to pay the tax bill until January 31st, 2025 - leaving you with plenty of time to plan! Avoid trouble and contact us in April to get ahead of your taxes. You can reach Short and Sons by emailing us anytime at jason@shortandsons.co.uk or WhatsApp/Call us on 07481 479933.