The tax deadline is imminent – act now to avoid penalties

31 January 2023 is the deadline for filing self-assessment tax returns for the year ended 5 April 2022. This article will go over who must complete and file a tax return, when it must be done by, and the consequences of submitting it beyond the deadline.

Who must submit a tax return?

The likelihood is that you must submit a tax return if, during the year, you:

• Have a self-employed income of more than £1,000
• Are a director of a company
• Earn more than £100,000
• Receive income from investments or savings that is greater than £10,000 per year, before taxes
• Earn more than £50,000, and are the highest earner in a family that claims child benefit
• Receive untaxed income of at least £2,500 (such as rent from a rental property, commissions or tips, etc.)

To double check whether you need to submit a tax return, check out the government’s guide here: https://www.gov.uk/check-if-you-need-tax-return

HMRC deadlines

You have a choice between filing your tax return online or on paper for the tax year that concluded on 5 April 2022. The 31 October 2022 deadline for paper returns has already passed, and the deadline for returns submitted electronically is 31 January 2023.

Any tax liability arising from the tax return must be paid by midnight on 31 January 2023 if you want to avoid penalties and interest charges.

Paying your tax bill and submitting your tax return late

Failure to submit your tax return on time will result in an automatic penalty of £100. Further penalties will be charged if your return remains outstanding 3, 6, and 12 months after the deadline.

If you are late paying your tax liability you will be charged interest on the outstanding tax. Furthermore if the liability is still outstanding after 30 days you will incur a surcharge equal to 5% of the outstanding tax. Further 5% surcharges are applied 6 and 12 months after the due date.

If you are unable to pay your tax liability on time it is important that you contact HMRC to advise them and agree a payment plan.

You can calculate any potential fines by using this website: https://www.gov.uk/estimate-self-assessment-penalties

Submitting your tax return

You must register with HMRC if you haven’t already in order to create an account and get your unique taxpayer reference number (UTR).

There are several ways to register. To view the government guidance for your particular situation, click the links provided below.

If you are an individual or sole proprietor, check this guide:  https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

If you are not self-employed and earn over £100,000 annually, check this guide:  https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-not-self-employed

If you are a partner in a partnership, check this guide: https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-a-partner-or-partnership

You can use the government’s online portal to complete and submit your tax return after registering (which could take up to 20 days).  https://www.gov.uk/log-in-file-self-assessment-tax-return

If you have not yet advised HMRC that you need to complete a tax return you should do so as soon as possible via HMRC’s website. HMRC will then issue you with a request to complete a tax return and you will have 3 months in which to submit the return.  The deadline for advising HMRC of the need to complete a tax return was 5^th October 2022 and therefore you may still face a penalty for late notification.

What details are required in order to complete your tax return?

To complete your return, you will need the relevant year’s documentation. This might comprise:

• A P60 from your employer detailing your income and PAYE tax deducted at source
• If you’ve left a job within the year, a P45;
• If you’ve received any benefits in kind, a P11D
• A breakdown of any rental revenue and costs
• Statements of savings and investments that detail dividends  and interest  received
• Receipts, bank statements, and other records showing self-employment income

Paying your tax bill

You have two options for paying HMRC: debit card or bank transfer (you can no longer pay your tax bill by credit card). If you have received a paying in slip from HMRC, you may also use it to pay at a bank or send a cheque in the post.

If you have any questions or concerns about completing your tax return, you should call JW Hinks on 0121 456 0190 as soon as possible. There is still time for our experienced tax team to ensure you are meeting all regulatory requirements without paying more tax than you owe, but there is no time left to waste.