HMRC to Fine UK Households £100 for Late Self Assessment Tax Returns Starting January 2025

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Starting January 2025, Her Majesty’s Revenue and Customs (HMRC) will introduce a stricter penalty system for late Self Assessment tax returns.

UK households failing to meet the submission deadline will face a £100 fine, marking a significant shift in how tax compliance is enforced. This move aims to encourage timely submissions, streamline revenue collection, and ensure that individuals fulfil their tax obligations responsibly.

If you’re required to file a Self Assessment tax return, understanding these new penalties and the steps to avoid them is essential. Let’s explore the details.

Deadlines for Filing and Paying Self Assessment Tax

Meeting HMRC deadlines is essential to avoid penalties and maintain compliance with your tax obligations. Here’s an in-depth look at the various deadlines, special cases, and what to do if you encounter challenges during the process.

Key Deadlines for the 2023/2024 Tax Year

The last tax year began on 6 April 2023 and ended on 5 April 2024. Below are the key dates to keep in mind for registering, filing, and paying your taxes:

1. Deadline for Telling HMRC You Need to File a Return

If you need to submit a Self Assessment tax return for the first time, you must notify HMRC by 5 October 2024. You can do this by registering for Self Assessment through HMRC’s website.

2. Deadline for Submitting a Paper Tax Return

Paper tax returns must be submitted by midnight on 31 October 2024. This applies to individuals filing the traditional way using forms such as the SA100.

3. Deadline for Submitting an Online Tax Return

For online submissions, the deadline is midnight on 31 January 2025. This is the most commonly used method due to its convenience and quicker processing times.

4. Deadline for Paying Tax Owed

All taxes owed for the 2023/2024 tax year must be paid by 31 January 2025.

If you’re required to make payments on account (advance payments towards your next tax bill), there’s an additional payment deadline on 31 July 2025.

Penalties for Missing Deadlines

HMRC imposes penalties for late filings or payments, which increase the longer the delay:

Up to 3 months late: A fixed penalty of £100.
More than 3 months late: Daily penalties of £10 per day (up to a maximum of £900).
Over 6 months late: A fine equal to 5% of the unpaid tax, or a minimum of £300.
Over 12 months late: Additional penalties, potentially doubling the total fines.

Interest on Late Payments

If you pay your tax bill late, HMRC charges interest on the outstanding amount from the due date. Conversely, if you’ve overpaid tax, HMRC will refund the excess with interest.

Appealing Penalties

You can appeal against penalties if you have a reasonable excuse, such as illness, bereavement, or technical issues. Supporting documentation will be required to validate your appeal.

Special Cases for Deadlines

Provisional Figures for Unknown Profits

If you don’t know your exact profit for the tax year before the filing deadline (e.g., due to different accounting periods), you can submit provisional figures.

Notify HMRC: Indicate that you’ve used provisional figures when filing your return.
Make Corrections: You have 12 months from the Self Assessment deadline to amend your return with final figures.

If more tax is owed after the update, you’ll need to pay the difference along with interest. If you’ve overpaid, HMRC will refund you with interest.

Different Deadlines for Special Cases

Automatic Collection of Tax from Wages or Pension:
Submit your online return by 30 December 2024 if you want HMRC to collect tax directly from your wages or pension.
Trustees and Non-Resident Companies:
Trustees of registered pension schemes and non-resident companies must submit paper returns by 31 January 2025, as they cannot file online.
Partnerships with Limited Company Partners:
For partnerships where a partner is a limited company and the accounting date falls between 1 February and 5 April, deadlines are:
- Online Returns: 12 months from the accounting date.
- Paper Returns: 9 months from the accounting date.

Steps to Ensure Compliance

Set Reminders: Use digital tools, apps, or calendars to track key deadlines.
File Early: Avoid last-minute submissions to prevent technical glitches or missing forms.
Use Professional Help: Accountants or tax advisors can help with complex cases or provisional filings.

How to Pay Penalties?

How to Pay Penalties

Same Day or Next Day Payment Options

The quickest ways to pay your penalty are as follows:

Online Bank Transfer: Use your bank’s online services to transfer funds via Faster Payments or CHAPS (Clearing House Automated Payment System).
Debit or Corporate Credit Card: Pay securely online through the HMRC portal.
In-Person Payment: Visit your bank or building society to make the payment directly.

Payments Taking 3 Working Days

For payments that take longer, consider these options:

Bacs Transfer: Arrange a bank transfer through the Bacs system.
Direct Debit (Pre-Set): If you’ve already set up a Direct Debit with HMRC, you can use it for penalty payments.
Cheque by Post: Send a cheque payable to HM Revenue and Customs. Ensure you account for postal delays to avoid late payment.

Payments Taking 5 Working Days

If you haven’t previously set up a Direct Debit with HMRC, the process to establish one and complete the payment may take up to 5 working days.

Key Considerations for Deadlines

If your payment deadline falls on a weekend or bank holiday, ensure the payment reaches HMRC on the last working day before the deadline.
The only exception is payments made via Faster Payments, which can be processed over weekends and holidays.

Appealing Against a Penalty

If you believe you have a valid reason for missing the deadline, you can appeal the penalty. Acceptable reasons, often referred to as reasonable excuses, include:

Severe illness or hospitalisation.
System failures preventing submission.
Delays caused by natural disasters or emergencies.

Submit your appeal promptly, as HMRC reviews each case on an individual basis.

Why is HMRC Enforcing Stricter Penalties?

The new penalty system reflects HMRC’s efforts to modernise tax compliance and reduce delays. Late filings disrupt the efficient collection of taxes, affecting government revenue and public services.

Additionally, the penalties support HMRC’s Making Tax Digital (MTD) initiative. This programme encourages taxpayers to move away from manual methods and adopt digital solutions for record-keeping and filing. By imposing fines, HMRC aims to incentivise individuals to adopt timely and accurate filing practices.

How to Avoid the £100 Penalty?

Avoiding the penalty is straightforward: submit your tax return before the deadline. Here’s how you can stay ahead:

1. Register Early with HMRC

If you’re new to Self Assessment, register as soon as possible. HMRC will provide you with a Unique Taxpayer Reference (UTR), which is necessary for filing.

2. Keep Your Records Organised

Maintain an accurate record of your:

Income from all sources (employment, rental, freelance, etc.).
Expenses and receipts eligible for deductions.
Bank statements for the tax year.

3. Use Online Filing Tools

Filing online is faster and more reliable than paper returns. HMRC’s website offers step-by-step guidance, calculators, and reminders to assist you.

4. Set Up Reminders

Mark the filing deadlines on your calendar or use digital tools like apps or email alerts to keep track.

5. Seek Professional Help

If your finances are complex, consider consulting a tax advisor or accountant. Their expertise can help you avoid errors and penalties.

Who Must Send a Tax Return?

Who Must Send a Tax Return

Submitting a Self Assessment tax return is a legal obligation for certain individuals in the UK. If you meet any of the criteria listed below for the previous tax year (6 April to 5 April), you are required to file a return with HMRC.

Mandatory Reasons to Send a Tax Return

1. Self-Employment or Business Partnership

If you were self-employed as a sole trader and earned more than £1,000 (before accounting for any tax relief or allowable expenses).
If you were a partner in a business partnership, regardless of your earnings.

2. High Income

If your total taxable income exceeded £150,000, you must file a return.

3. Capital Gains Tax Obligations

If you disposed of an asset, such as property or shares, and incurred a liability to pay Capital Gains Tax, a tax return is required.

4. High Income Child Benefit Charge

If you or your partner received Child Benefit and your income exceeded £50,000, you may be subject to the High Income Child Benefit Charge, necessitating a tax return.

Additional Circumstances

Even if the above criteria don’t apply, you may still need to file a tax return if you received untaxed income during the tax year. Examples include:

Rental Income: Earnings from letting out a property.
Tips and Commission: Additional earnings from your job or business.
Income from Savings and Investments: Interest, dividends, or profits on investments not taxed at source.
Foreign Income: Money earned outside the UK that remains untaxed.

How to Register and Send a Tax Return?

Filing a Self Assessment tax return with HMRC involves two key steps: registering for Self Assessment tax and submitting the tax return. Whether you’re filing for the first time or are a seasoned taxpayer, understanding the process can help you avoid penalties and ensure compliance.

Registering for Self Assessment

If you need to file a Self Assessment tax return and haven’t done so before, you must first register with HMRC. This applies to individuals who are newly self-employed, receive untaxed income, or meet other criteria requiring a tax return.

Steps to Register

Check Your Eligibility: Determine if you need to file a return using HMRC’s online tool.
Set Up an Online Account: Visit the HMRC registration page and create a Government Gateway account if you don’t already have one.
Provide Necessary Information: During registration, you’ll need to provide:
- Your National Insurance number.
- Personal details such as your name, address, and date of birth.
- Details about your income source (e.g., self-employment, rental income).
Receive Your UTR Number: HMRC will send you a Unique Taxpayer Reference (UTR) number, which you’ll need to file your return.

Record Keeping

Once registered, it’s crucial to maintain accurate financial records, including:

Bank statements.
Receipts for business expenses.
Proof of income from all sources.

These records ensure your tax return is accurate and complete, helping you avoid errors and potential fines.

Sending Your Tax Return

Once registered, you must file your Self Assessment tax return before the deadline. There are several methods to do this, depending on your preference and circumstances.

1. Sending a Return Online

Filing online is the quickest and most convenient option. HMRC’s online system provides step-by-step guidance and automatically calculates the tax owed.

Deadline: The deadline for online submissions is 31 January following the end of the tax year.

Benefits of Online Filing:

Instant confirmation of receipt.
Access to live support and resources.
Faster tax refunds if applicable.

2. Sending a Paper Return

If you prefer a traditional method, you can file your tax return using paper forms.

Steps:

Download the SA100 tax return form from HMRC’s website.
Alternatively, contact HMRC to request a paper form by post.
For trustees of registered pensions, use form SA970.

Deadline: The deadline for paper returns is 31 October (or 31 January for trustees of pension schemes or non-resident companies).

Once submitted, you can check with HMRC to track the processing of your return.

3. Using Commercial Software

For more complex tax situations, such as partnerships, trusts, or non-resident filings, you may need to use commercial software approved by HMRC.

Commercial software can assist with:

Filing returns for partnerships.
Reporting income from trusts and estates.
Filing as a non-resident or for special categories like Lloyd’s underwriters or religious ministers.
Reporting multiple asset sales or chargeable gains.

Benefits of Using Software:

Tailored for complex filings.
Streamlined calculations for specific scenarios.
Secure and efficient submission process.

If You No Longer Need to Send a Tax Return

Circumstances change, and you may find that you no longer need to submit a Self Assessment tax return to HMRC. If this applies to you, it’s important to notify HMRC to avoid unnecessary filings and potential penalties.

Informing HMRC

If you believe that you no longer need to send a tax return, you must inform HMRC as soon as possible. Upon review, HMRC will either:

Agree with your assessment: They will send a letter confirming that you no longer need to file a return.
Disagree with your assessment: You may still need to file by the Self Assessment deadline (31 January) to avoid penalties.

Failing to notify HMRC or submitting an incomplete return could result in fines, even if your income no longer meets the requirements.

Reasons You May No Longer Need to Send a Tax Return

You may not need to file a Self Assessment tax return if any of the following apply:

Change in Income: Your income is now below the £150,000 threshold, removing the need for a return.
No Rental Income: You no longer rent out a property or receive rental income.
No High Income Child Benefit Charge: You’ve stopped paying the High Income Child Benefit Charge, either because your income has decreased or you no longer claim Child Benefit.

If you’re uncertain about your obligation to file, HMRC offers an online tool to help you check.

If You’re No Longer Self-Employed

If you’ve stopped being self-employed, you need to notify HMRC directly. Even after informing them, HMRC may still request tax returns for subsequent years, so it’s crucial to verify your filing requirements annually.

How to Notify HMRC About Ending Self-Employment?

Log In Online: Use your Government Gateway account to report the end of your self-employment.
Submit the Cessation Date: Provide the exact date when you ceased self-employment.
Confirm Tax Obligations: Ensure there are no outstanding taxes or filings for the period you were self-employed.

How to Tell HMRC You No Longer Need to Send a Tax Return?

There are multiple ways to inform HMRC that you no longer need to submit a tax return:

Online Form
- Complete the appropriate form on HMRC’s website.
- You’ll need to log in with your Government Gateway credentials to submit it.
Digital Assistant
- Use HMRC’s digital assistant for a quick and guided process.
By Phone or Post
- Call HMRC or send a written notification, including your National Insurance number and Unique Taxpayer Reference (UTR).

When notifying HMRC, ensure you provide accurate and complete information to avoid delays or complications.

Key Tips for Hassle-Free Self Assessment Filing

Filing a tax return doesn’t have to be daunting. With the right preparation, you can file accurately and on time.

Gather Necessary Documents

To simplify the process, ensure you have:

P60 or P45 forms (for employed individuals).
Invoices and receipts (for the self-employed).
Interest statements from banks and investment accounts.

Leverage HMRC Tools

HMRC offers an online portal with various resources, including expense guides and live chat support.

Double-Check Your Submission

Errors in your tax return could lead to delays and additional fines. Verify all details, including:

Income figures.
National Insurance number.
Bank account information for refunds.

Consequences of Repeated Late Filing

Failing to comply with filing deadlines consistently can have significant repercussions:

Financial Strain: Repeated fines can accumulate into thousands of pounds over time.
Legal Consequences: Persistent non-compliance may lead to court proceedings or even asset seizure.
Credit Score Impact: Unpaid fines could be reported to credit agencies, damaging your creditworthiness.

Conclusion: Filing On Time is the Smart Choice

The new £100 penalty for late Self Assessment tax returns reinforces the importance of timely compliance.

While it may seem like a small amount initially, repeated delays can lead to significant financial and legal consequences. With proper organisation and the right tools, filing your tax return doesn’t have to be stressful.

Take proactive steps today to prepare for the upcoming 31 January 2025 deadline. By doing so, you’ll avoid penalties and enjoy the peace of mind that comes with staying on top of your finances.

FAQs on Self Assessment Penalties

What happens if I file late but have no tax to pay?

The £100 penalty applies even if you owe no tax. It’s crucial to file on time regardless of your tax liability.

Can I appeal against a penalty?

Yes, if you believe the fine is unjust, you can appeal through HMRC’s online platform. Ensure you have valid evidence for your appeal.

What if I missed the deadline due to an emergency?

HMRC may waive penalties for reasonable excuses such as severe illness, bereavement, or system failures. You’ll need to provide supporting documentation.

Are there payment plans for penalties?

If you’re struggling to pay, HMRC may offer instalment plans. Contact them promptly to discuss your options.

Can I amend my tax return after submission?

Yes, corrections can be made within 12 months of the original deadline. Use the online portal to make changes.