Visit us on Facebook Visit us on LinkedIn Visit us on Twitter Visit us on YouTube Visit us on Instagram
 

Don’t Delay, self-assess today

The 31 January deadline for submitting online self-assessment tax returns is suddenly looming large. If you’re not one of the 10,000 or so people who submitted their returns on Christmas Day or Boxing Day – no, me neither – and you still haven’t done it yet, then it’s time to get moving on your return.

Do you need to submit a return?

Self-assessment is not just for the self-employed. If you have any income which is not taxed at source, such as rental income or capital gains, you’ll need to complete a tax return. The financial year covered by the upcoming deadline is 6 April 2017 to 5 April 2018.

And the deadline might still be relevant even if you had no income: if you’ve completed a tax return in the past, then unless you have specifically been told by HMRC that you don’t have to submit another one, you must file a tax return even if you do not need to pay any tax.

If you miss the 31 January submission deadline, even with no tax to pay, you will be liable for financial penalties.

If you’re unsure, then call HMRC on 0300 200 3310.

How to submit?

The easiest and quickest way is online, and HMRC have a straightforward system for submitting your return – and helpful notes available.

There’s a useful video on the HMRCgovuk YouTube channel which gives a great overview on completing your return.

What information will you need?

  • HMRC are looking for information on your taxable income, so dig out any relevant paperwork you have – your P60, dividend vouchers, Interest statements and so on. ISAs are exempt because they are tax-free savings vehicles, but capital gains are treated differently.
  • Even if you haven’t made a taxable capital gain, if you’ve sold an asset which is more than four times your capital gains allowance (£45,200), you still need to declare it on your tax return, even if tax is not due.
  • Your pension may also be relevant: if you’ve put more than your annual allowance into your pension (for most people that’s £40,000pa, but it may be less if you have total income from all sources of more more than £110,000), then you may be liable for an income tax charge.
  • The key thing is to take action! Self-assessment returns are broken up into many parts, so it’s a big job to complete. Don’t put your head in the sand and ignore this until deadline day. Call the helpline, watch the YouTube video and avoid this next section being relevant to you.

Penalties

Penalties are split into two areas.

Late (or no) submission penalties

  • If you miss the 31st January deadline by even one day, you’ll pay a £100 penalty. If you still haven’t submitted after three months, you’ll be charged an additional £10 per day, up to a maximum of £900.
  • After those six months, if you still haven’t completed your self-assessment return, another penalty of £300 will be added. And if after a year you STILL haven’t submitted, you’ll be hit with another £300 penalty.
  • That’s £1,600-worth of penalties in total, just because you didn’t take action and get your return done.

Tax penalties

  • If you have tax to pay, then the penalties rack up quickly for late payments. You’re given 30 days to pay before a 5% penalty of the tax due is applied, on 1 March. Another 5% penalty on your total balance due comes into force on 1 August (six months later). A further 5% penalty is due if you still haven’t paid the tax by 1 February, a year later.
  • And if that’s not bad enough, you’ll also be charged interest, currently 3.25% on your tax owing.
  • Add up all the penalties above and if you only owe £100 in tax but don’t submit for a year, you’ll end up paying over £1,700!
  • That should be more than enough motivation to set aside time and submit your return as soon as you can.

 

 

Teaching your child the value of money
How to manage your credit card debt