Nothing says ‘Welcome to the New Year’ like a last-minute tax return panic!
It hurts to say but with Christmas over it’s now time to get back into the swing of things and start planning your business year ahead. Whereas staying warm in the cold weather might seem like the most important thing right now, for you there’s a much more urgent matter at hand. – your Self-Assessment tax return.
When is it due?
Your Self-Assessment tax return is due by midnight on 31st January.
I haven’t started it yet, what if I’m late?
You’re not alone! Last year, HMRC revealed that a whopping 3 million people were yet to even start their tax return with just one week to go before the deadline!
If they managed OK then what’s the rush?
The incentive to file on time comes in the form of fines issued by HMRC for anyone who files their tax return after the 31st January deadline.
Stage 1: As soon as midnight ticks by on the 31st January you will be liable for £100 immediate penalty. Regardless of whether you have tax to pay or not you will receive this fine.
Stage 2: After this, it’s then a £10 per day fine for up to three months after the deadline has passed (up to a maximum of £900). That’s £900 that could be avoided by simply getting to work right now.
Stage 3: If six months pass then you’ll be liable for a final fine of £300 or a 5% charge on the tax due. You’ll pay whichever of these amounts to the highest value.
Stage 4: If all of this passes and there is still no submission then expect a flurry of correspondence from HMRC and potentially further fines passed out at HMRC’s discretion.
So is it better to just submit something as soon as possible?
Not quite. Whilst the temptation may be to submit any old return to buy yourself some time it is worth noting that there are also potential fines for incorrect submissions. Running around and rushing in your submission in the dying moments is stressful and can easily lead to mistakes and figures being overlooked. It is best to avoid the stress and start as early as possible.
In addition to this, there is the stress of actually paying the tax bill itself. If you aren’t prepared for the final sum then it can easily become a nasty little surprise that can put a hole in your cashflow so early in the New Year. Although there isn’t much time remaining right now, going forward it’s always best to save as you go along in preparation for this moment.
OK, I’m ready to start. What do I do first?
First off you will need to gather your financial records including receipts, invoices, bank statements and anything else that may provide evidence of your finances throughout the year.
Next, what are your expenses? Again, be sure to find as much evidence as possible here and also use this to help back up any tax breaks that you hope to receive. Remember to look up any charitable donations you made in the tax year in case you can use the gift aid element to extend your basic rate band and pay more tax at the basic, rather than higher, rate.
Finally, everything needs to be filed online with HMRC. Paper submissions are no longer accepted and you will receive a fine if you try and send one in! Be sure to leave enough time to find your way around the online form, and remember that HMRC’s gateway server is likely to be very slow given how many people are trying to do the same thing you are.
I still need a little help.
That’s what we’re here for. Although there isn’t much time left a good accountant will help you to compile your accounts quickly and accurately thus ensuring you stay on the right side of HMRC and avoid those heavy fines we mentioned earlier. The fee charged for such a service pays for itself when you consider it is all done for you, on time with no stress. All you have to do then is pay the tax.