If you’re new to self-assessment or haven’t quite got your act together on the paperwork front, you may worrying about whether you’re going to “make it” before the deadline and anxious about the repercussions of a late tax return submission to HMRC.
Here are the facts:
Your tax return for 2015-16 is due for online filing by midnight on the 31st January 2017. This is also the deadline for paying your tax.
What happens if I don’t file my self-assessment return on time?
I’m busy and I might have to file my tax return one day late, is there a penalty?
Yes, you’ll be charged an automatic £100 penalty even if it’s only a day late.
Don’t be fooled into thinking that just because you have no tax to pay or you are due a refund, HMRC will let you off the hook. You’re still required to submit your tax return by the due date. If you’re not sure whether you need to complete a tax return you can check here.
Working for my customers comes first – I can swallow the penalty of £100 but could I leave filing my tax return until May?
Not to be recommended because if you don’t file your tax return by 30th April 2017 (3 months late) you will incur daily penalties of £10 per day up to maximum of £900.
I’m out the country for the next few months – what happens if I file my tax return 6 months late?
Try and avoid this scenario. File your tax return 6 months after the due date and you will incur a further penalty of: the greater of 5% of the tax due or £300.
I’ve lost the plot completely – what happens if I file my tax return a year late?
Now is the time to re-evaluate your priorities and get organised. If your return is not filed by 31st January 2018 (one year late) then you will incur an additional penalty being the greater of 5% of the tax due or £300.
The longer you delay, the more you will have to pay
This is true. All the above costs are cumulative and if you add them up, you could potentially owe up to £1,600 in penalties after a 12 month period, regardless of how much tax you need to pay.
I have a reasonable excuse as to why I couldn’t file my tax return on time
Reasonable excuses could get you of the hook. Here are some examples:
- The HMRC computer system failed
- You have a serious illness, disability or serious mental health condition which has made you incapable of filing your tax return
- You’ve lost your tax records through fire, theft or flood
These are not considered reasonable excuses by HMRC:
~ “ my wife helps me with my tax return, but she had a headache for ten days”
~ “ My husband told me the deadline was the 31st March”
~ “ I couldn’t complete my tax, because my husband left me and took our accountant with him. I am currently trying to find a new accountant”
~ ” I had a cold”
You can appeal to HMRC against a penalty for not submitting your tax return on time or paying tax late by filling in a form or writing to HMRC, giving your reasons for appealing. There is more detail here.
Don’t forget to pay your tax
For the super-organised and uber-efficient small business owner who filed their tax return last April, don’t forget to actually pay your tax. We, in the UK have longer to file our tax returns than most other countries and it’s the easiest thing in the world to file promptly and then forgot to pay your tax 10 months later.
HMRC will heap more penalties on those who do not pay their tax by the due date.
- If payment is 30 days late then you will pay a penalty of 5% tax due
- In addition to the above costs, if you are 6 and 12 months late the penalty is 5% tax owing at that date
If you want to calculate how much you could potentially owe HMRC in penalties for the late submission of your tax return and late payment of your tax you can do so here.
I’ve delayed submitting my return because I am worried that I can’t pay my tax
If you know now that you won’t be able to pay on time, tell HMRC. They might give you more time to pay or let you pay your bills in installments.
If the thought of completing your tax return unaided fills you with complete trepidation, take a peep at how I have helped others just like you. You can look me up here or drop me a line on my contact form. I would love to hear from you.
Keen to forge ahead by yourself? This blog series on tax returns may be all the support you need. And if you would like to be the first to receive any new blog posts, you can sign up for my monthly tips and inspiration.
Over to you
I hope this post has been helpful. Do drop me a line in the box below if you have any questions. If you’ve enjoyed the post please consider sharing with other small business owners, using the buttons below. It would mean so much if you did. Thank you.