Self-Assessment Penalties

It’s not always easy getting your self-assessment tax return in on time. Sometimes you may just simply forget with your busy working schedule, or you may have a family emergency that prevents you from filing before the deadline date. Unfortunately, when you forget to either send it to HMRC or pay on time, there will be self-assessment penalties which can make a simple mistake quite costly to you.

We’ve created this useful guide to tell you everything you need to know, including the current self-assessment tax return deadline and information on whether you’ll need to complete one yourself.

What is a self-assessment tax return?

Technically, a self-assessment is not actually a tax – it’s a way of paying tax. A self-assessment allows you to be responsible for completing your tax return and paying any tax you may owe for that year. It’s your job as a self-employed individual or sole trader to alert HMRC if you need to complete a tax return.

When filling out a self-assessment tax return, you’ll need to include all of your income and any capital gains you may have. You can fill out the form either on paper and send via post or you can do it online, then HMRC will calculate your tax liability for that tax period.

Self-assessment penalties

Even if your self-assessment tax return is only a day late, you’ll still face a penalty of £100 for the late return. After this you’ll then have 3 months to pay, otherwise, you’ll receive an additional fine.

HMRC will also charge interest on any late payments, so before long the fees will stack up and you may find yourself struggling to pay. It’s also worth noting that there are separate penalties for both making a late return and making a late payment, so if you’re late for both, expect double the penalties.

Penalties for late return

The current self-assessment penalties for a late tax return are as follows:

  • 1 day late: £100 fine
  • 3 months late: £10 fine a day, up to 90 days (£900 maximum fine)
  • 6 months late: £300 fine or 5% of the tax owed, whichever is more
  • 12 months late: additional £300 fine or 5% of the tax owed, whichever is more

Penalties for late payment

The current penalties for late payment of tax owed are as follows:

  • 30 days late: 5% charge on the amount owed
  • 6 months late: 5% charge on the amount owed
  • 12 months late: 5% charge on the amount owed

What to do if you can’t pay your tax on time

If you can’t afford to pay your self-assessment tax on time, contact HMRC as soon as you’re able. If they think that you may be able to pay the full amount in the future, they might set up a payment plan which will allow you to pay in instalments to suit your income.

If you couldn’t pay your bill on time because of a situation that was out of your control, you may be able to appeal it with HMRC. They have a requirement which means they have to consider any special circumstances and may override or reduce self-assessment penalties if they think you qualify. Examples of special circumstances include: an error on HMRC’s behalf, IT issues, postage delay (such as a strike), advisor error, natural disaster or illness.

Once you appeal and tell HMRC of your special circumstances, they will then decide if it’s an unforeseeable or exceptional event that was beyond your control.

Self-assessment tax return deadline

In order to avoid facing costly fines, you’ll need to file before the self-assessment tax return deadline. When doing it online, you’ll be given an additional 2 months as opposed to when sending it via post to HMRC. The current timetable for self-assessment tax returns is:

  • 5th October: deadline to register for your self-assessment tax return
  • 31st October 12am: deadline for paper tax returns
  • 31st January 12am: deadline for online tax returns
  • 31st January 12am: deadline to pay any outstanding tax

Do I need to complete a tax return?

You may be wondering do I need to complete a tax return? You’ll need to file a self-assessment tax return if you’re self-employed or a sole trader earning more than £1000, a partner in a business partnership, a trustee or executor of an estate or a minister of religion.

Additionally, you’ll also have to complete a self-assessment tax return if you have any untaxed income such as property rentals, tips, commissions, savings or investments over £10,000 or any foreign income (this applies whether or not you’re a resident in the UK).

It’s always a good idea to aim to pay before the self-assessment tax return deadline, as this will avoid your fines snowballing out of control and putting you in a position where you can’t afford to pay.

How Accountancy Solutions can help

If you can’t find time in your busy schedule to juggle your books or if the financial mumbo jumbo is getting you down, we can help! Our team of professional personal accountants can appeal to HMRC on your behalf and assist with getting any years that haven’t been submitted up to date and ensure everything’s safely delivered to HMRC.

Additionally, our team has years of experience in successfully dealing with HMRC and can potentially reduce or even remove any penalties you may face. And, going forwards, we’ll always ensure that your tax is paid right on time, so you can focus on running your business.

Want to take the stress out of your finances? Call us on 01633 288 299 or get in touch via our online form to kickstart the process.