Late tax return penalties: Fines for not filing
Ahead of the self-assessment deadline on January 31, this is the cost of missing the tax return due date
The first thing to remember about not submitting your tax return on time, or paying your tax, is that there are no excuses.
It doesn’t matter if the HMRC website was “too busy” or if you couldn’t get through to an advisor on the phone, filing your returns late or not paying altogether will cost you – and maybe a lot more than you anticipated.
Secondly, even if you do not owe any tax you will still be charged a penalty if you do not file a tax return by January 31 (if you file online) documenting any earnings the year ending the previous April 6. You can read more about whether you need to submit a tax return in our guide on how to register for self assessment tax.
Late tax return penalties (self assessment tax)
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NB: Penalties are in addition to one another, so a self-assessment tax return filed a year late could be subject to penalties of at least £1,600 – or even more, depending on the level of tax due to HMRC.
At 12 months of non-filling, if the business owner is found to be guilty of “deliberate and concealed” mistakes in order to withhold information, they will need to pay 100% of tax due, or £300 if greater.
If it’s deliberate, but not concealed, they will need to pay 70% of tax due, or £300 if greater.
Late tax return penalties (corporation tax)
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NB: If a corporation tax return is late three times in succession, each £100 penalty will be increased to £500.
Late tax payment penalties
From 21 November 2017 the interest rate for late payment of corporation tax, income tax and National Insurance contributions went up from 2.75% to 3% per year, incurred daily. In addition to a tax penalty for not filing on time, you must of course pay the tax on time; there are independent fines for both not filing and not paying on time.
In addition to late payment interest incurred daily, late payment penalties are as follows:
You can estimate your tax return penalties for late Self Assessment tax returns and payments on the Gov website.
Examples of how the penalties work in practice can be seen on the Taxation website.
When is my tax return due?
You must submit your tax return by 31 January following the end of the tax year if you completing the process online.
If you are submitting your return on paper, then your self-assessment form must be submitted by 31 October following the end of the tax year.
A tax return should disclose your taxable income and gains for the relevant tax year. A tax year starts on 6 April and ends on the following 5 April.
Also note that all of your taxable income and gains must be declared on a tax return – even if they have been taxed before you received them ( or ‘taxed at source’), such as employment income or bank interest.
Common tax return items
- Bank interest: Your tax return should include any interest your bank accounts have accrued – even if it has been taxed at source. Your bank should have sent you a tax certificate in or around May with all the details you need.
- Employment income: You will need your P60/ P45 – and P11D if applicable. If you don’t have these to hand, your final payslip for the tax year should have the information you need. If you can’t find that either, you should ask your employer for the details.
- Employment expenses: If you are employed and have travelled business miles or incurred related expenses, you may be able to claim for them if your employer has not reimbursed you.
- Pension contributions: Your pension provider should have issued you with an annual statement. Avoid using the amounts on your bank statement, as you may need the gross amounts to claim tax relief.
- Dividends: These must be included even though they are taxed at source. If you have reinvested them, they still need to be included in your tax return. Dividend vouchers should have been sent to you around the time each dividend was paid.
- Second homes: You may need to disclose your rental income and expenses on your tax return, even if you let the property at a reduced rent or generate a loss. If you let the property out at a reduced rent, expenses will be restricted to the amount of rent received- meaning you can’t create a loss and the surplus expenses are simply forgone; they can’t be carried forward. If you make a loss, contrary to popular opinion, there can be instances when you may still be obliged to complete a return or it may be advisable to. If you’ve sold a second property during the year, you may have to pay capital gains tax and the Stamp Duty Land Tax will be at higher rates than normal.
- Charitable donations: Any donations you have made to charity under the Gift Aid scheme should be included on your return.
- Other income: Any ‘cash in hand’ or other taxable income that doesn’t fit into any obvious boxes on your tax return may still need to disclosed – even if there is no paperwork or it has been paid in cash. As of April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.
The above list is by no means comprehensive, so it is always advisable to have an accountant help you complete your tax return as HMRC will penalise you for any mistakes made in your tax return – whether you were aware of them or not. At the bottom of the page we have a simple form to give you a free initial consultation with a local accountant who may be able to help.
How to fill in a tax return
There are seven main rules you need to follow when completing a self-assessment return form.
When completing a paper return:
- Only use black ink
- Only write in capital letters
- If you make a mistake, just one line through the error. Do not use correction fluid
When completing a paper or online return:
- Round income down to the nearest pound
- Round expenses up to the nearest pound
- Round tax paid to the nearest pound
- If a box doesn’t apply to you, leave it empty
How to do a tax return
Read our full guide on how to complete a tax return here.
The initial information you provide to complete a tax return should be fairly straightforward and will include things like your date of birth, address, National Insurance number and date of birth.
Once you’ve submitted your registration request, provided everything is in order, HMRC will send you a confirmation letter/email with a unique taxpayer’s reference, or UTR – a unique code you’ll use when submitting your tax return.
How to get a tax return
You can register for and file your self-assessment tax return on the government’s website. You’ll need to register for a tax return again if you’ve sent one in the past but didn’t have to send one last year. Read more in our guide on how to register for self assessment tax.
When registering with the HMRC in order to complete the self-assessment, they’ll be a number of forms you’ll be able to choose from, and selecting the right one will depend on your reasons for requiring a return.
For example, if you’re newly self-employed you’ll need form CWF1, if you’re becoming a partner in a partnership, use form SA401, and for any other reason, such as you have become a director, you’re likely to need form SA1.
Most HMRC registrations can now be done online on their website www.hmrc.gov.uk.
Paying tax once you’ve completed a tax return
There are a number of ways you can pay HMRC, such as Direct Debit, Bank Giro, online banking etc
You cannot pay tax by credit card or via the Post Office.