Tax Return Deadline: Beat The Fines

With the tax return deadline just around the corner, we have a look at the potential fines and penalties that you risk incurring if you don’t file your tax return online before the 31 January deadline

Making a tax return online is fairly straightforward these days but we know with the hectic schedule of Christmas it can easily get looked to well into January and cause undue stress. Here’s what you need to know:

How to fill in an online tax return

Most UK taxpayers are given a tax code and have tax deducted according to this code automatically by their employers (via Pay As You Earn (PAYE)) and don’t need to fill in a tax return. However, there are a lucky nine million or so people who need to complete a self-assessment tax return (either a SA100 or SA200) and submit this to their tax office.

The deadline for filling a paper tax return (31 October) has now passed. You now have until 31 January to fill out your tax return online.

If you are filing online for the first time, the best thing to do is watch a video walkthrough, such as this one from HMRC’s own YouTube channel:

Penalties and fines if you miss the tax return deadline

It’s really not worth missing the deadline as HMRC don’t give you much leeway, slapping fines on you as soon as you’re late. If it’s unavoidable you’ll need to know the charges and how costly it can be if you keep delaying:

One day late

An automatic £100 fine. It doesn’t matter whether you owe no tax or have paid your tax, they’ll still charge you.

Three months late

For each day you delay there’s an extra £10 fine up to a maximum of £900 or 90 days’ worth of payments. This doesn’t include the £100, meaning the total payment can be as much as £1000.

Six months late

Either you’ll be fined £300 or 5% of the tax due, whichever is the higher. This, again, is added to the existing fines.

12 months late

In the worst case scenario you may have to pay back 100% of the tax due, as  well as any tax you owe for the current year; or you’ll get another £300 fine or 5% of the tax due, whichever comes to the most.

The lesson: it’s not worth missing the deadline.

Tax Estimates

If you don’t get your return in by the 31 January deadline, HMRC can estimate the tax you owe, assuming they’re in a proactive mood. You’ll then have to pay their estimated tax and any interest they deem necessary. If they’ve miscalculated your tax liabilities, you can correct their figures by submitting your correct tax return.

Fines for Late Payment

If you fail to pay on time, the costs start mounting on top of the fines since you’ll be charged interest from the date the payment was due. You can check how much interest you’ll pay on the HMRC site but remember this is variable.

Incorrect tax return penalties

There aren’t just fines for late tax returns; deliberately deceptive or erroneous returns will also be punished.

Incorrect tax return penalties are based on the amount of tax you owe, and are payable in addition to the tax owed.

Most of the time if you have taken reasonable care to fill in your return correctly, you will not be penalised but:

  • If you have been careless, the penalty will be between 0% and 30% of the extra tax owing.
  • If you have deliberately underestimated your tax, the penalty is between 20% and 70%.
  • If you have deliberately underestimated your tax and attempted to conceal the fact, the penalty will be between 30% and 100%.

You may not have to pay as much as you’re originally told if you fully cooperate with HMRC.