Avoid making the festive holiday a taxing time

To ensure this is the season to be jolly, taxpayers should complete their online tax returns ahead of the festive season to avoid paying hefty penalties in the New Year.

HM Revenue & Customs (HMRC) estimates around 11 million people will be required to submit a return for the tax year 6th April 2017 to 5th April 2018. If they’re still outstanding, these tax returns need to be filed electronically by 31st January 2019 to avoid an automatic filing penalty being issued.

Therefore, the sooner you complete your tax return, the less stressful the festive holiday will be. Forward planning will also reduce the risk of making any costly mistakes or having to make corrections to your tax return at a later date.

Act now and beat the rush…

HMRC received 10.7 million completed Self-Assessment tax returns ahead of the 31st January 2018 deadline – more than 93.5% of the total returns expected, and 150,000 more than the year before.

More than 92.8% of returns (9.92 million) were filed online, continuing the growing trend to deal with the tax authority electronically.

The busiest hour was between 4pm and 5pm, with 60,596 returns being submitted– 17 per second.

It’s wise, therefore, not to leave your return until the last day, as HMRC’s website and call centres will be extremely busy over the festive period.

And if a busy website and being at the back of a phone queue aren’t incentives enough, remember that filing your returns late will force you to dig deep into your pockets.

A late tax return is currently subject to the following penalty regime:

• An initial £100 penalty, which will apply even if there is less than £100 tax to pay or the tax due is paid on time
• 3 months: Additional daily penalties of £10 per day – up to a maximum of £900
• 6 months: A further penalty of 5% of the tax due or £300 – whichever is greater
• 12 months: Another 5% of the tax due or £300 - whichever is greater

In the most severe cases, the penalty after 12 months can be up to 100% of the tax due

These penalties are in addition to one another, so a self-assessment tax return filed a year late would face penalties of at least £1,600 – or even more, depending on the level of tax due.

There are also additional penalties for late registration with HMRC and late payment of tax, with the latter also incurring interest.

Let us ease the pressure

Although HMRC’s online filing system for tax returns will calculate your tax liability for you, it will not check whether your figures are accurate or that you have claimed your full entitlement to expenses and allowances.

At TaxAssist Accountants we pride ourselves on helping this pressure by taking care of all your tax affairs: from registration with HMRC and completion of your tax return, to calculating your tax liability and due dates.

Contact us today to find out more about what we can do for you on 01494 718 777.

Date published 27 Nov 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.