HMRC is making a big penalty change for millions filing their tax returns in weeks – here is how YOU can avoid a nasty bill.
It’s not just those who are self-employed who need to file a tax return – you may need to if you get income from savings, tips or commission.
The deadline for filing your tax return online for the last tax year (6 April 2024 to 5 April 2025) is midnight, January 31 2026.
If you need to make a return you have just a few weeks to get your affairs in order or you could face a penalty.
If you FILE it late, HMRC charges you a £100 penalty – then you also face further fines of £10 a day after three months, up to a maximum of £900.
There’s also a penalty if you PAY it late. After the payment is 30 days late, 5% of the tax is charged. If you’re six months late making your payment, you’ll be fined a further 5%, and then a further 5% after 12 months.
Aside from these penalties, there is also a SEPARATE late payment interest charged on top for paying a tax return late.
This late payment interest is set at the Bank of England’s base rate.
It is currently 8%, but now the base rate has gone down to 3.75%, this late payment interest rate will go down next month.
It means that those who do not pay on time face interest payments of 7.75% on top of their cash fine – down from 8%.
The taxman said these changes are due to come into effect on January 9, just days ahead of the online return deadline.
Those who wish to avoid paying a penalty can do so by filing their return online via http://www.Gov.uk.
Who needs to fill out a self-assessment tax return?
YOU’LL need to submit a tax return if any of the following applied to you in the 2022/2023 tax year:
- You were self-employed and your income was more than £1,000
- You had multiple sources of income over £1,000
- You earned £10,000 or more before tax from savings, investments, shares or dividends
- You claimed Child Benefit when you or your partner earned more than £50,000 a year.
- You earned more than £2,500 from renting out property, or from other untaxed income, such as tips or commission
- You earned more than £100,000 in taxable income
- You earned income from abroad or lived abroad and had a UK income
- You need to pay capital gains tax
- You received income from a trust
- Your state pension was more than your personal allowance and was your only source of income (unless you started getting your pension on or after 6 April 2016)
- HMRC has told you that you didn’t pay enough tax last year (and you haven’t already paid up through your tax code or via voluntary payments)
- You filed a self-assessment tax return for the 2021/22 tax year (even if you didn’t owe any tax)
- You were self-employed and earning less than £1,000 but you still want to pay ‘class 2’ national insurance contributions voluntarily to protect your entitlement to the state pension and certain benefits
