LITRG is urging people to complete their 2018/19 Self Assessment tax return online before 31 January 20201 or risk a fine from HMRC. HMRC charge an automatic penalty of £100 for tax returns that miss the 31 January deadline – and the penalties increase the longer you delay the submission of the tax return.2 LITRG is also highlighting that people who face the loan charge/or who are in the process of ‘settling’ their use of loan arrangements, are allowed to defer filing their returns until September 2020.
The advice from LITRG comes as HMRC expect 11.7 million tax returns by 31 January. HMRC estimate that around 54 per cent of taxpayers have already filed their returns with more than 5.6 million of those completed online (89 per cent of the total returns filed).3
Self Assessment is a system HMRC use to collect income and capital gains tax. Tax is usually deducted automatically from wages and pensions (but not from the UK state pension). Savings income is usually paid gross, but tax can still be payable. People and businesses that do not have tax deducted at source will usually have to complete a tax return, even if there is no tax to pay. Also, self-employed subcontractors who have had tax deducted under the Construction Industry Scheme will also need to file a tax return even if there is no additional tax to pay. HMRC provide a tool if you are unsure whether you need to file a return. If someone is filing online for the first time through HMRC’s online service, they must have received their Unique Taxpayer Reference (UTR), enrolled for the online service and activated their account using the code they receive.
Victoria Todd, Head of LITRG Team, said:
“There is time to avoid a penalty if you are one of the millions of people yet to complete and submit a tax return online for 2018/19. If you have not yet registered for online filing this process can take a few weeks so you will need to act now. HMRC urge anyone who is expecting to find it difficult to pay their tax to get in touch with them as soon as possible.
“You may have started your tax return but are stuck with the tax treatment of a particular expense. Or you may be unsure if parts are correct or even if you still need to file a tax return. There is guidance available from organisations such as LITRG4 and also from HMRC. It is better to look for help now rather than miss the deadline and get charged an automatic late filing penalty of £100.
“You should double-check that you have correctly submitted your return online once you have fully completed it. You may complete your tax return and print off a draft return and tax calculation but not realise that you also need to submit the return as the last step of the online process. You should get a submission receipt from HMRC once the process is completed if you have used HMRC’s online filing system correctly.”
HMRC will allow those with loan charge issues to defer filing their 2018/19 tax returns/paying their 2018/19 tax liability until 30 September 2020, without consequence, even if there is tax to pay for another reason. This also means that those settling have until 30 September 2020 to finalise their settlements, without needing to register for Self Assessment if they are not already in it (or without the need to include any loan charge income, if they are).5
There is guidance and help available for those struggling with their tax return. The LITRG website has comprehensive guidance on most areas of tax and HMRC have many sources of information including webinars, YouTube videos and webchat facilities, as well as its Self Assessment helpline (0300 200 3310).
1. The 31 January 2020 deadline for online filing applies to those who have been issued a notice to file a 2018/19 tax return and that notice is issued prior to 1 November 2019. Where the 2018/19 tax return is issued on or after 1 November 2019, the deadline for filing the return is deferred until three months from the date the return was issued. The deadline for notifying HMRC of any untaxed income or certain capital gains is 5 October following the end of the tax year. If taxpayers have not notified HMRC of their obligation to file a return and they are not otherwise registered for Self Assessment, then they cannot yet have been issued with a return. Although this defers the filing deadline, separate penalties based on tax unpaid by 31 January may be applicable as a result of the late notification.
2. The penalties for late tax returns are:
- an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time
- after three months, additional daily penalties of £10 per day may be charged, up to a maximum of £900
- after 6 months, a further penalty of five per cent of the tax due or £300, whichever is greater
- after 12 months, another five per cent or £300 charge, whichever is greater
- There are also additional penalties for paying late of five per cent of the tax unpaid at 30 days, 6 months and 12 months. Interest will be charged on all late payments.
Note that earlier deadlines usually apply for paper returns (generally 31 October after the end of the tax year).
3. HMRC Press release 'Get quacking' - with less than a month to go, 3 January 2020.
4. Our website includes helpful articles such as Filing your tax return online for the first time? Be clear on the registration process.
5. HMRC document 20 December 2019 Disguised remuneration: guidance following the outcome of the independent loan charge review, says: “Customers who have not filed their tax return, or agreed a settlement with HMRC, should submit a Self Assessment tax return for the 2018 to 2019 tax year. You can either submit by 31 January 2020, giving your best estimate of the tax due, or file by 30 September 2020. HMRC will waive penalties for late filing, late payment and inaccuracies in respect of the loan charge entries in these returns. Late payment interest will not be payable for the period 1 February 2020 to 30 September 2020, as long as a return is filed, and tax paid or an arrangement made with HMRC to do so, by 30 September 2020.”