Ah, August. A month for splashing in the pool, lazing on the beach, gazing at the horizon and – if you’re self-employed – you’ll very likely be putting any intrusive thoughts about not paying your July tax bill to the back of your mind.
As the cost-of-living crisis rolls on and middle-class families struggle to afford their usual week in the sun – or even a day at a theme park – it’s become even more painful to hand over your hard-earned cash by the miserably timed deadline.
The deadline dodgers have just five days left to pay before they face coughing up a fine equal to 5 per cent of the bill.
And that’s on top of a £100 penalty for being late in the first place. But as the writer Douglas Adams said: ‘I love deadlines. I love the whooshing sound they make as they go past.’
This year, I seem to have more self-employed friends than ever before who have quietly admitted they’ve just ‘not got round it’ or haven’t yet put quite enough aside to cover it, given that it’s the school holidays and they’ve had to fork out for extortionate childcare, on top of the mortgage, bills and weekly grocery shop.
Some have simply whacked a holiday on the credit card, jetted off and decided to worry about the tax bill when they return.
Others are defiantly trying to hang on to their money till the last possible minute. They can’t be the only ones. Over a million people missed the first deadline at the end of January.
In her 30s, Flic Everett admits she was terrible with moneywith unopened brown envelopes shoved to the back of the drawer
To Flic, the endless letters from the tax man were all just a distant, brewing storm that she could ignore, until she left it too long – and she ended up in debt to HMRC for almost twice the original sum
All of the above is understandable perhaps – but, let me tell you, it’s also deeply foolish.
Trust me, I know from bitter personal experience that delaying tactics do not work on the taxman, any more than reciting poetry works on a hungry tiger. Basically, he’s coming for you either way.
I learned this lesson in the most painful way imaginable, when I was in my early 30s.
Back then, I had a self-employed husband whose earnings were erratic, a young son, three stepchildren, an enormous Victorian house (with matching enormous mortgage) to accommodate everyone and several credit cards.
It was the height of Blairism, and there always seemed to be enough money swishing about to pay for holidays, meals out and decent clothes.
I was earning far more than I’d ever expected to, and working relentlessly, juggling a series of books, columns, TV appearances and newspaper contracts like a stressed, Mancunian Carrie Bradshaw.
I was good at my job – and terrible with money. I was also too busy to stop and deal with the pile of financial demands, so the admin piled higher, with unopened brown envelopes shoved to the back of the drawer and the awareness that debt was accruing somewhere shoved to the back of my mind.
I’d been freelance from the moment I left university, and I’d never learned money skills. My parents were very much of the ‘make hay while the sun shines’ mindset, and had always got by, so I somehow assumed that I would, too.
To me, the endless letters from HMRC were all just a distant, brewing storm that I could ignore while the sun was still beaming down and we could afford a trip to Majorca. Until I left it too long – and when I finally opened the letters I’d been avoiding, the clouds broke.
I discovered that because I hadn’t paid my tax bill on time, I had been placed in a system which charged an increasing percentage of the amount owed for each day it remained unpaid.
Months had passed and I was now in debt to HMRC for almost twice the original sum. I didn’t have the money – a busy summer and our wonderful Spanish holiday for six meant my credit cards were maxed out, and I had no idea what I was going to do.
The only answer was to sell our home. It was a five-bedroom semi on a good street in the South Manchester suburbs and it had accrued about £100,000 of equity in the five years we’d owned it. (Those were the days.)
HMRC figures from this year reveal around 1.1million people missed the deadline for filing tax returns, generating a penalty of £100 and a rise in the interest due on the payment
I had no other way of finding over £30,000 at short notice, and the alternative was to declare myself bankrupt – not appealing as it would mean zero chance of getting a mortgage, credit card or loan for at least six years, as well as the deep, old-fashioned shame I felt at the prospect.
The house sold after a few months and we moved to a slightly smaller but still-on-a-good-road house nearby, allowing the children to remain at their schools, and I paid the tax bill.
But as lessons go, it was a short and sharp one. I vowed never again to get into a situation where I was financially powerless due to my own stupidity and avoidance, and I never have.
Aside from the idiocy of hiding letters that scared me, for a very long time, I also had to live with the guilt of knowing that I’d caused so much upheaval in the children’s lives, forcing them into a move they’d probably rather not have made.
Knowing a disaster was avoidable always makes it far worse. Thankfully, at the time, we had a way out. If it happened now, I wouldn’t be so fortunate.
But while I now file my returns on time, and pay up as soon as the bill arrives, others are not so chastened. HMRC figures from this year reveal around 1.1million people missed the deadline for filing tax returns, generating a penalty of £100 and a rise in the interest due on the payment.
And I doubt it’s just laziness or not getting around to it. For many, tax forms induce genuine dread – not only at their complexity but also the time they’ll take to fill in.
Financial coach and chartered certified accountant Tanya Ibberson says: ‘I’ve noticed a definite trend of people filing tax returns later in recent years and this year will be no different.’
Ibberson believes the trend is driven by ‘a mixture of financial overwhelm, economic uncertainty and, in many cases, mindset blocks around money’.
‘With cost-of-living pressures and no real recovery from Covid times, many people who I work closely with, especially self-employed women, are burnt out,’ she goes on. ‘They’re procrastinating on important business admin, even when they know there may be penalties.’
At the same time, HMRC seems to be tightening its grip. ‘With the upcoming Making Tax Digital requirements for self-employed taxpayers looming in April 2026 [which will require the self-emploted to keep digital records and send quarterly updates], they’re clearly ramping up expectations and enforcement,’ warns Ibberson.
A Which? survey recently found that self-assessment tax returns take Britons 19million hours to complete – around two-and-a-half hours for each individual
‘I suspect they’re trying to increase compliance using the stick rather than the carrot, possibly to reduce the chaos.’
A Which? survey recently found that self-assessment tax returns take Britons 19million hours to complete – around two-and-a-half hours for each individual.
No wonder so many are running late. My own fear of money has been greatly eased by employing an accountant for many years, even though I’m spending more by doing so – the relief of knowing I’m not messing up far outweighs the outlay.
But I have many friends who do their own accounts, and live in fear of the time and forensic maths it requires.
Of course we should be putting money aside to pay the eventual bill – we all know it’s not really ‘our’ money – but when the cost of living is bordering on obscene, and a week at the seaside is what we used to spend on a year’s rent, maybe it’s no surprise too few of us do.
I learned the hard way, though, that procrastination can lead to disaster. And I’d hate anyone else’s anxious delay to become the far more devastating experience of losing your home.
