Yesterday, HMRC revealed that while thousands filed their Self Assessment on New Year’s Day, 5.4 million people are still yet to submit their tax return.
To help, UK lawyer and Head of Legal Operations at Lawhive, Daniel McAfee, has shared practical tips on completing your tax return, why filing on time is crucial, and the costs of late submissions.
Missing the January 31st deadline triggers an automatic £100 penalty, even if no tax is owed. Further delays can lead to additional penalties, which escalate over time, alongside interest on unpaid amounts. Persistent non-compliance may result in legal action by HMRC, including debt recovery measures.
“Failure to act can result in HMRC instructing debt collectors or pursuing a County Court Judgment (CCJ). For professionals, a CCJ can have severe career implications, such as affecting their ability to hold director positions or damaging their professional reputation.
“Penalties for late or inaccurate returns are calculated based on the delay length and the amount owed. You can appeal penalties by demonstrating a reasonable excuse, such as a family emergency, technical issues with HMRC’s system, or illness.
“If paying your tax bill by the deadline is not feasible:
- Contact HMRC immediately to request a Time to Pay Arrangement, which allows you to spread the payment over an agreed period.
- Ensure you file your return on time, even if you can’t pay the full amount. Filing late incurs separate penalties from payment delays.
- Consider seeking financial advice to explore additional options.”
Daniel explains the key mistakes people make, the common misconceptions and how you can avoid them.
- “Incomplete or Incorrect Information: Many filers omit income sources or input incorrect figures. Double-check all entries, including income from savings accounts, investments, or foreign sources. Errors can lead to penalties or delays in processing.
- Ignoring Deductions and Allowances: Overlooking allowable expenses such as home office costs, mileage, or professional subscriptions can result in overpaying tax. Keep detailed records throughout the year to claim these deductions accurately.
- Rushing to File: Filing at the last minute increases the likelihood of errors. Aim to submit your return well before the deadline to allow time for corrections if necessary.
- “I don’t need to file because I’m PAYE”: PAYE employees often need to file if they have income from other sources, such as property rentals or investments.
- “HMRC will notify me if I need to file”: Responsibility for determining whether you need to file lies with the individual, not HMRC.”
UK Lawyer provides five tips on how you can protect yourself against scams when filing out your tax return
“Fraudsters often target taxpayers during the self-assessment season. To stay safe:
- Recognise Genuine Communication: HMRC will never ask for sensitive information such as passwords or bank details via email, text, or phone.
- Verify Requests: Always cross-check communications by logging into your HMRC account or calling their official helpline.
- Be Cautious with Links: Avoid clicking on links in unsolicited emails or texts. Instead, type the official HMRC website URL directly into your browser.
- Report Scams: Forward suspicious emails to phishing@hmrc.gov.uk and report fraudulent texts to 60599. Suspicious phone calls can also be reported to Action Fraud.
- Protect Personal Information: Be mindful of sharing your National Insurance number or tax details, especially on social media or unsecured platforms.”
Daniel shares his three tips for first-time filers and challenges that sole traders may face.
- “Register Early: Ensure you are registered with HMRC for self-assessment well before the deadline.
- Understand the Basics: Familiarise yourself with HMRC’s guidelines, especially on allowable expenses.
- Seek Guidance: Don’t hesitate to ask for professional help if unsure about any aspect of the process.
“Sole traders and gig workers face unique difficulties such as irregular income and tracking allowable expenses. Simplify the process by:
- Using dedicated apps or software to log income and expenses in real time.
- Keeping a portion of your earnings aside (e.g., 20-30%) to cover tax liabilities.”
What to do if you can’t afford the tax bill? Daniel McAfee explains.
“If paying your tax bill by the deadline is not feasible:
- Contact HMRC immediately to request a ‘Time to Pay Arrangement’, which allows you to spread the payment over an agreed period.
- Ensure you file your return on time, even if you can’t pay the full amount. Filing late incurs separate penalties from payment delays.
- Consider seeking financial advice to explore additional options.
“Tax matters can become complex, especially for those with multiple income sources, investments, or disputes with HMRC. Professional legal advice can help ensure compliance, challenge penalties, or resolve disputes effectively.”
Why have 5.4 million Brits still not filed their tax returns? UK lawyer explains and immediate steps you should follow if you’re a late filer.
- “File as Soon as Possible: Penalties increase over time, so the quicker you file, the less you’ll owe.
- Explain Your Circumstances: If the delay was due to a valid reason, such as illness, provide evidence to HMRC to appeal penalties.
“Procrastination often stems from fear of making mistakes or underestimating the time required. To avoid last-minute stress:
- Create a checklist of required documents and start gathering them early.
- Set reminders for important deadlines.
- Break the process into manageable steps to make it less overwhelming.”
Three tips from UK lawyer at Lawhive on how you can file your tax return and the tax deductions you should be aware of.
- Organise Documents Early: Gather P60s, P45s, receipts, and bank statements in advance.
- Use Digital Tools: HMRC’s online portal or accounting software can simplify the process.
- Review Before Submission: Double-check all entries to avoid errors and penalties.
Many taxpayers miss out on valuable deductions, such as:
- Business mileage and travel expenses.
- Home office costs for self-employed individuals.
- Professional memberships and training relevant to work.
- Charitable donations eligible for Gift Aid.
By addressing these challenges and following these tips, taxpayers can approach their self-assessment with confidence, reduce stress, and potentially save money. For additional guidance, visit the official HMRC website or seek advice from qualified professionals.
