With less than two weeks before the self-assessment deadline on 31 January 2024, it’s time to hurry up and submit your 2022/23 tax return. But what happens if you miss it?
Keep reading to learn about what happens if you file your tax return late and what you should do to ensure you meet your obligations on time.
What happens if I miss the self-assessment deadline?
Filing your return late won’t just result in a slap on the wrist from HMRC. If you miss the deadline by even just a minute, you’ll need to pay an automatic £100 penalty.
This automatic fine only applies on returns that are up to three months late. Wait any longer than that, and you’ll face more severe non-compliance penalties:
- After 3 months: You may need to pay a penalty of £10 for each day your return is late, up to a maximum of 90 days.
- After 6 months: You may need to pay a further penalty of either 5% of the tax you owe or £300 (whichever is greater).
- After a year: In addition to the penalties already incurred, you may need to pay a further penalty of 5% of the tax you owe or £300. Some self-assessment customers will be required to pay up to 100% of the tax owed.
Penalties for late payment
In addition to these late filing penalties, you may also receive fines and accrue late payment interest for missing the payment deadline, which is also set for 31 January 2024.
- After 30 days – you’ll incur a penalty of 5% of the tax owed at that date.
- After 6 months – you’ll incur a further penalty of 5% of the tax owed at that date
- After 12 months – you’ll incur a further penalty of 5% of the tax owed at that date.
As of 22 August 2023, HMRC late payment interest rates stand at 7.75% for income tax, NICs and capital gains tax liabilities– although this is subject to change.
What if I have a reasonable excuse?
If you have a valid reason for not being able to fulfil your tax obligations on time, you may be able to appeal against a penalty. HMRC may cancel or amend your penalty if it determines that you have a ‘reasonable excuse’.
Examples of reasonable excuses include personal reasons such as a death in the family or serious illness. You may also be able to appeal if you experienced significant HMRC service issues or software problems when attempting to submit your return.
What if I can’t pay the balance?
If you don’t have sufficient funds to pay your tax bill on time, try not to panic – and let HMRC know as soon as possible. In some cases, you may be able to set up a payment plan with the tax authority. This is also known as a ‘time to pay’ agreement.
‘Time to pay’ allows eligible taxpayers to pay their tax bill in instalments over a period of up to 12 months. As a self-assessment customer, you can often set up a payment plan online if you meet the following criteria:
- you’ve filed your latest self-assessment tax return
- you owe no more than £30,000 in tax
- you’re within 60 days of the payment deadline
- you have no other outstanding debts or payment plans with HMRC.
How can I avoid the self-assessment headache?
As experienced accountants, we know that self-assessment season can be stressful. Money is tight for many UK businesses and households at the moment, and non-compliance penalties may be the last thing you need. Thankfully, there are a few things you can do to help you stay compliant.
Get started straight away
The best thing you can do to avoid these extra costs is to start your self-assessment tax return as soon as possible. The earlier you get it out of the way, the sooner you’ll be able to pay your bill and relax.
Don’t rush
While speed is of the essence, it’s also important not to rush. HMRC may issue a fine if you make a mistake on your tax return – and you could even become the subject of an investigation. To prevent this from happening, make sure to double and triple-check your calculations.
Inform HMRC
If you’re worried about missing the filing deadline, not having enough money to foot the bill, or don’t know your profit for the whole tax year, honesty is always the best policy. Keeping HMRC in the loop shows that you have nothing to hide from the authorities.
Ask for help
Hiring an accountant can also help you meet your obligations on time. A tax expert will know how to keep you on the right side of HMRC and maximise your expense claims – and they may even offer a comprehensive tax return service.
Bringing in a professional can be particularly helpful if you have complicated tax affairs – but an accountant’s input can also be valuable if you just need to ask questions about your return.
Don’t leave your return until the last minute. Get in touch with us to discuss your options today.
