If you complete a Self-assessment Tax Return, you’ll know all about the filing and payment deadlines. If you complete a paper return, you have until 31st October each year to file it. Most people, though, file online. If you do, you have until 31st January to file your return. However you file your return, though, you need to pay any tax due by 31st January. Unfortunately, late Self-assessment returns are relatively common. In 2024, an estimated 1.1 million people missed the filing deadline.

New late self-assessment penalties in May

Unfortunately, a late Self-assessment return can soon get expensive. If you’ve not filed your return by 1st February, you immediately get hit with a £100 penalty. You will also be charged interest on unpaid tax from this date. At the time of writing, this is 7.75% (you can find the latest interest rates here).

If you haven’t submitted your Self-assessment Tax Return towards the end of April, you need to act fast. From 1st May each year, fresh penalties for late returns kick in. From that date, you have to pay £10 per day until you do submit the return. This additional penalty can be applied for three months. That means you could be a further £900 out of pocket.

Even if you can’t pay your tax, it’s vital to get your late Self-assessment return submitted by the end of April. If there are good reasons why you can’t file it, contact HMRC as soon as possible. In exceptional circumstances, they have the power to waive the penalties.

Further penalties

Things get worse if your late Self-assessment isn’t filed after May. Assume you’ve left it until 1st August, six months after the deadline. By this point, you’ll have racked up £900 in penalties over the last three months. You can now add to this a further bill of £300 or 5% of the tax due, whichever is the greater. Fail to submit for a full year and you’ll be hit by another £300 or 5%.

Then there are late payment penalties. These are 5% of the unpaid tax at 30 days, 6 months and 12 months. These are on top of interest.

Other perils of late Self-assessment

HMRC can be very proactive in chasing up debts. If you don’t pay tax or penalties, it’s possible they’ll send someone to visit you at your home or business address to discuss why you can’t pay. If they can’t reach an agreement with you, they may use enforcement powers to collect the debt. This may involve seizing your possessions and selling them to settle the debt.

Alternatively, HMRC may instruct a debt collection agency to contact you about what you owe. While they can’t visit your home or premises, you need to either pay them the debt or talk to them about setting up a Time to Pay arrangement.

Tips for avoiding Self-assessment penalties

While it’s tempting to put off filing your tax return, it can get very expensive if you don’t file it on time. Never leave it until the last minute and, if you do miss the deadline, submit it as soon as you possibly can. And whatever else you do, don’t ignore correspondence from HMRC about late submissions or payments. If you are having financial troubles, talk to HMRC to come to a payment agreement.

Of course, in a busy world, it’s easy to put your tax return on the back burner. However, it’s much wiser to use an accountant like THP to handle your Self-assessment Tax Returns. Each year, we’ll not only help you submit your return on time, but we’ll give you the advice you need to keep your tax bill as low as possible.

And if you’re reading this towards the end of April, get your return sorted now! Why pay £10 a day in penalties when you really don’t need to.

Need further advice on any of the topics being discussed? Get in touch and see how we can help.

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    About Jon Pryse-Jones

    Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.

    An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”

    Jon’s appreciation for THP extends to his fellow team members and the board.  “They really know how to run a successful business,” he says.  He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.

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