Do you have to file an Annual Tax Return with HMRC? You are in good company if you do, as you will be one of 12 million people in the UK that have to do this each and every year.
There are two deadlines for filing your Return with HMRC.
The first is by 31st October if you want to file a paper Tax Return and send this to HMRC by post. The second and final deadline is 31st January after the end of the tax year if you file the Return online.
This means that you have almost 10 months to prepare and submit the Tax Return with HMRC.
When do you have to pay your Tax?
Once you have worked out your tax liability then the tax is due for payment by 31st January, the same day as the filing deadline.
In some cases you will have to make further payments on 31st July, but this does not apply to all.
But how can I not pay tax in January?
As mentioned, you must pay by 31st January. However, there is an option for some to not pay their tax in January, and pay your Self Assessment tax through your PAYE code in the following tax year. This means that you do not pay in one lump sum and you spread the cost of liability across 12 months in the following tax year.
There are certain conditions that have to be met as follows:
- You owe less than £3,000 on your tax bill
- You already pay tax through PAYE, for example you’re an employee or you get a company pension
- What is vitally important is that you submit your online tax return online by 30 December
However, this does not apply to all people and you will not be able to pay your tax bill through your PAYE tax code if:
- You do not have enough PAYE income for HMRC to collect it
- You’d pay more than 50% of your PAYE income in tax
- You’d end up paying more than twice as much tax as you normally do
Penalties for late tax returns
So, what happens if you do not file your Return by the 31st January deadline? There are strict penalty regime that HMRC impose as follows:
- an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
- after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;
- after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
- after 12 months, another 5% or £300 charge, whichever is greater.
- There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, 6 months and 12 months.
Do you have a requirement to file a Return?
So, what do you do if you think you might have to file a Return but haven’t done anything yet? Our advice is act now. You need to register online with HMRC for Tax Return preparation and this can take up to 30 days to be processed so don’t leave this until January!
You can see the importance of getting your Return done, accurately and on time so if you require any help with your Tax Return requirements or have any questions contact us today to arrange a FREE consultation, we have Chartered Accountants and Tax Advisers in Canary Wharf, Essex and Manchester waiting for your call.