Get your Self-Assessment Tax Return Filled Early to Avoid HMRC Penalties

Filing a self-assessment tax return can be daunting for many individuals, especially those new to the process. However, it is important to understand the requirements and procedures to avoid penalties and ensure compliance with tax regulations.

Who needs to file a self-assessment tax return?

In the UK, self-assessment tax returns are required to be filed by individuals who fall under any of the following categories:

1. Self-employed individuals: If you are self-employed, you are required to file a self-assessment tax return. This includes individuals who run their businesses, work as freelancers, or are in a partnership.
2. High earners: If your income exceeds £100,000 per year, you must file a self-assessment tax return.
3. Company directors: If you are a company director, you must file a self-assessment tax return.
4. Landlords: If you earn rental income from a property, you must file a self-assessment tax return.
5. Those with income from abroad: If you have income from abroad, you must file a self-assessment tax return.
6. Those who receive income from trusts, settlements, or estates: If you receive income from trusts, settlements, or estates, you are required to file a self-assessment tax return.

What information is required for the tax return?

When filing a self-assessment tax return, you will need to provide information about your income, expenses, and any tax reliefs or allowances you are entitled to. This includes:

1. Employment income: Details of your employment income, including any benefits or expenses.
2. Self-employment income: Details of your self-employment income, including any expenses incurred in running your business.
3. Rental income: Details of your rental income, including any expenses incurred in maintaining the property.
4. Investment income: Details of any income earned from investments, such as dividends or interest.
5. Capital gains: Details of any capital gains you have made during the tax year.
6. Pension contributions: Details of any pension contributions you have made.
7. Tax reliefs and allowances: Details of any tax reliefs or allowances you are entitled to, such as charitable donations or personal allowances.

Deadline for paper filing

The deadline for paper filing is 31st October every year. If you choose to file your tax return on paper, you must do so by this date to avoid any penalties or charges. However, it is worth noting that paper filing is becoming less common, with more and more people opting for online filing due to its convenience and efficiency.

Deadline for online filing

The deadline for online filing is 31st January every year. If you file your tax return online, you have an extra three months to do so compared to paper filing. However, it is important to note that you must register for online filing before submitting your tax return. This process can take up to 10 working days, so it is advisable to do this well before the deadline to avoid delays.

Latest updates and changes in tax regulations

It is crucial to keep up to date with the latest updates and changes in tax regulations when filing your self-assessment tax return. One of the significant changes in recent years has been the introduction of Making Tax Digital (MTD) for VAT. This means businesses with a turnover above the VAT threshold must keep digital records and submit their VAT returns using MTD-compatible software. It is expected that MTD will be rolled out to other taxes, including income tax, in the near future.

Another change to be aware of is the introduction of the loan charge, which came into effect in April 2019. This affects individuals who have used disguised remuneration schemes to avoid paying taxes. The loan charge is a one-off tax charge on all outstanding loans taken out since 1999, and it is important to ensure that any relevant information is included in your self-assessment tax return.

Consequences of missing the deadline

Missing the deadline for filing your self-assessment tax return can have serious consequences, including penalties and charges. The penalties for late filing are as follows:

• £100 if your tax return is up to 3 months late
• £10 per day if your tax return is more than three months late, up to a maximum of £900
• A further penalty of 5% of the tax due or £300 (whichever is greater) if your tax return is more than six months late
• A further penalty of 5% of the tax due or £300 (whichever is greater) if your tax return is more than 12 months late

In addition to these penalties, interest will be charged on any late tax. In some circumstances, HMRC may waive the penalties for late filing, such as if you have a reasonable excuse for missing the deadline. However, filing your tax return on time is always best to avoid any unnecessary charges or penalties.

In conclusion, meeting the deadlines for filing your self-assessment tax return is crucial to avoid penalties or charges. By keeping up to date with the latest updates and changes in tax regulations and ensuring that you file your tax return on time, you can ensure that the process runs smoothly and efficiently.