HMRC issued 540,000 late payment penalties in 2022 according to data from Thomson Reuters.

The total value of fines issued by the Government tax collector hit £187 million in the same year.

This comes as the Bank of England base rate continues to increase, sending late payment charges up with it. HMRC now charges 7% to those who fail to file their tax returns on time as it raises charges in lockstep with the central bank.

In 2022 interest charges were just 3.25%, less than half the current level. The changes came into effect from May for both quarterly and non-quarterly late payments.

Anyone in the UK who earns money being self-employed, is a partner in a business partnership, earns over £100,000 a year, or earns income from savings, pensions, investments, dividends or property rentals, is liable to fill out a self-assessment tax return for each year they earn in.

There are exceptions to these if the level of income is below the threshold for paying tax, or if money is sheltered in tax-efficient accounts such as ISAs.

 

Tax deadlines

Tax self-assessment is a foundational part of managing earnings. While minimising tax liabilities in the first place is key, just making sure  those liabilities are met each year is essential too.

The tax return is relevant to the past tax year, so the current assessment deadlines pertain to the tax year 2022-23 which finished on 5 April 2023.

The current deadlines are as follows:

• 5 October 2023: register for self-assessment
• Midnight 31 October 2023: paper tax return deadline
• Midnight 31 January 2024: online tax return deadline
• Midnight 31 January 2024: pay the tax you owe

There are some caveats to this though. For example:

• There’s a second payment deadline on 31 July if you make advance payments, known as “payments on account.”
• You’ll need to submit an online tax return by 30 December if you want HMRC to collect tax from wages or pension automatically.
• If you have a company as a partner, with an accounting date between 1 February and 5 April, the online return deadline is 12 months from the accounting date while paper return is nine months.

 

Time to Pay

Those who find themselves behind on tax returns and facing penalties should get in touch with HMRC to discuss a ‘time to pay’ deal as quickly as possible to prevent further charges, or even prosecution, from arising.

Time to Pay plans soared during the pandemic years, with 21,000 taxpayers making the arrangement in 2021-22. These plans allow taxpayers to set up 12-month payment schedules for their tax liabilities. Taxpayers were given extra time to file during the pandemic, thanks to administrative delays.

With rigorous wealth management and support in place from financial advisers, this shouldn’t happen. However, it is essential to be aware of the deadlines, your potential liabilities, and how to prepare your wealth to meet those liabilities smoothly.

 

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 14th June 2023.