Whatever plans you may have for the festive season, they’ll hopefully involve taking some time away from your business to relax with family and friends; certainly, the very last thing you should be doing is spending time stressing about your tax affairs.
But every year, this is exactly what thousands of people do, using the Christmas break to file their annual tax return.
According to HM Revenue and Customs (HMRC), last year1,944 people submitted their self-assessment forms online on Christmas Day, 6,214 on Christmas Eve, and a further 6,200 on Boxing Day. By early January, returns were still outstanding for 4 million people!
One can only imagine the misery and stress behind these statistics, but there’s really no reason why filing a tax return should be left until the last-minute.
if you’re one of the 10 million people in the self-assessment tax system, and you haven’t already taken care of your tax return for the year ended 5th April 2017, you should get your return filed well ahead of the festive season. That way, you’ll be able to relax and enjoy the build up to the holidays.
Deadlines for Filing Your Self-Assessment Tax Return
The date by which you must file your self-assessment tax return will depend on how you want to submit it, and how you want to pay any tax you owe.
1) If you want to pay the tax you owe in a lump sum
- 31st January 2018 is the deadline for submitting an online tax return, and will be the key date for most self-employed people.
- 31st October 2017 is the deadline for filing a paper tax return, so if you’re one of the few people still submitting your return this way, you only have a few weeks left. With the government on track to make tax digital within the next few years though, we’d strongly advise moving online as soon as possible.
2) If you want HMRC to automatically collect self-assessment tax through your tax code
- 30th December 2017 is the deadline for anyone who is already paying tax at source on regular income, and wants to pay self-assessment tax in monthly instalments, rather than as a lump sum in January.
This option can help spread tax payments for individuals receiving a second income – from employment, a pension, property investments or company dividends for example.
To be eligible to pay in instalments you must:
- Owe less than £3,000 on your tax bill
- Already pay tax through PAYE
- Have submitted your online or paper tax return by the relevant deadline
If you miss the deadline for filing your self-assessment tax return, HMRC will issue an automatic fine of £100. After three months, this will increase by £10 per day, up to a maximum of £900.
Deadline for Paying Your Tax
Of course, filing your self-assessment tax return on time is only half the story. Unless you’ve made arrangements to pay in instalments through your tax code as outlined above, you’ll need to ensure you settle your bill for the tax year 2016-2017 with HMRC by no later than 31st January 2018.
Significant fines plus interest will be added to any overdue tax, and HMRC has powers to seize personal goods from individuals.
If you are paying your tax in a lump sum, there are two further things to be aware of which can often catch people out:
- As well as being the final date for filing your online tax return, 31st January is also the date by which you must pay your tax bill. Don’t make the mistake of waiting to pay your tax until you get a bill from HMRC. The later you file your return, the more likely it is that your bill won’t be processed in time to arrive with you before it’s due to be paid, and you’ll find yourself facing a penalty for late payment.
- If the amount of tax you owe is more than £1k, in addition to paying your tax for 2016-2017, HMRC is likely to ask you to make an additional contribution towards your tax bill for 2017-2018. You will have to make 2 Payments on Account – one on 31st January and another on 31st July, each equivalent to half your previous year’s tax bill.
Payments on Account can come as an unwelcome surprise to anyone unprepared – especially if they’ve submitted a late return and not saved for the additional tax due.
Act Now & Avoid surprises!
The best way to ensure you are prepared for your self-assessment tax bill is to put money aside throughout the year, but of course life being life, not everyone is quite so disciplined.
The next best thing is to file your return as soon after the end of the tax year as you can. This way, you’ll know exactly what you owe early, giving you plenty of time to save so you’re able to pay on time.
Although HMRC are generally reasonable about making arrangements with anyone needing time to settle their tax bill, they’ll never agree a payment plan in advance of 31st January – expecting as much of what is due to be paid up to and including this date. Only then will they negotiate a plan to include any fines and interest due.
Let Inca Take Care of Your
Annual Tax Return
As Chartered Certified Accountants, Inca can take all the hassle out of preparing your annual self-assessment tax return.
Call us now on 0123 586 8888 to get a quote!