Tax returns deadline fast approaching
Have you been proactive with your tax returns this year? ICAEW and Tilney argue that many are far from prepared
Aside from coping with the January blues, taxpayers have been reminded to file their tax returns to HMRC by the end of January.
“With the start of the New Year, attention tends to turn to the end of the year, where savers and investors realise they have a limited time left to make the most of their various tax allowances before the 5 April deadline,” investment and financing planning group, Tilney, stated.
However, the far more urgent deadline is looming for millions of people; according to the HMRC website, 5.5 million have yet to complete their tax returns. They only have until midnight of 31 January 2019 to do so before they start incurring fines.
The deadline for paper returns was 31 October 2018; those who have yet to file their returns can now only do so online. As of 31 December, ICAEW reported that 52% of taxpayers filed their returns—approximately 5 million of these were completed online.
However, this does leave a worryingly high number of individuals who have yet to submit.
Anita Monteith, ICAEW technical tax manager, warned: “Leaving tax returns to the last minute might not seem like the end of the world to people who complete one every year, but, if this is your first time, there are a few extra things to consider. If you haven’t filed online before, you must allow time to sign up on GOV.UK and for your activation pin to arrive through the post. This can take up to 10 days. It may take longer than you expect to find and prepare all the paperwork. If you are an employee, you will need information your employer gave you many months ago, such as your P60 and possibly a P11D if you receive taxable benefits such as a car. If you are self-employed, then you will need your business records, and if you receive a pension, then your pension statement.”
Submitting your tax returns one day late will incur a £100 fine—a fine that will continue to increase by £10 a day, to a maximum of £900 by 1 May.
HMRC has disclosed that 8.212 million self-assessment returns were submitted for the 2016-17 tax year by the end of the January deadline.
Nonetheless, as Monteith has explained: “There have also been some changes to how you can pay your tax. Since 2017, it has not been possible to make a payment through the post office and individuals can no longer pay their tax using a personal credit card. This may mean planning another way to pay, ahead of the deadline.”
Jason Hollands, managing director at Tilney, concluded: “There are of course unwelcome penalties for late payment, with a 5% charge on the tax owed for late payment after 30 days, as well as interest charged at a rate of 3%. Those owing less than £3,000 could have avoided the need to make a lump sum payment altogether and settled the tax owed through PAYE, had they filed a paper return by 31 October 2018, or online by the end of December.
“A little time invested on planning and using the various options available or spent seeking the help of a professional financial adviser can lead to a significant improvement in your circumstances and might provide you with a tax cut far more generous than anything the chancellor provided in his last Budget.”
