Tax warning as thousands could be hit with HMRC fine…

Tax warning as thousands could be hit with HMRC fine with deadline looming

Unless you are one of the 2,800 people who completed their tax return on Christmas Day last year, the chances are you will have put the task to the back of your mind until late January.

But HM Revenue and Customs (HMRC) is encouraging Self Assessment customers to put their tax return at the top of their to-do list so they can tick it off and enjoy the festivities. There is also a distinct advantage to filing before the new year if you are employed, because those who file before December 30 may also have the option of paying any tax owed through their PAYE tax code, meaning you will not have to find a lump sum.

The deadline to file your annual return online for tax year 2021-22 is January 31, 2023, and any tax owed needs to be paid by the same deadline, so the earlier you tackle the job, the longer you have to pay. You may also be hit with a penalty if you file or don't pay what's due late. The deadline to file a paper return was October 31.

More than 10.2 million customers filed their 2020 to 2021 tax returns by the deadline this year, with more than 630,000 of those filing on deadline day. The peak hour for filing was 4-5pm.

You will not normally have to complete a tax return if your only income is from your wages or pension, but you must send a tax return if, in the last tax year (April 6 2021 to April 5, 2022, one of the following applied:

You were self-employed as a ‘sole trader’ and earned more than £1,000;
You were a partner in a business partnership;
You received certain COVID-19 grant or support payments;
You earned money from renting out a property;
You received tips and commission;
You had income from savings, investments and dividends;
You received foreign income.

In addition, you may also have to send a return if:

You claimed Child Benefit and your income (or your partner’s) was over £50,000, as you may need to pay the High Income Child Benefit Charge;
If you want to claim some Income Tax reliefs
If you need to prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance

People will get a penalty for missing the deadline - with a fine of £100 if your tax return is up to three months late. That figure will increase if it's later, or if you pay your tax bill late. Interest will also be charged on late payments.

HMRC’s Myrtle Lloyd said: “We are encouraging customers to plan their Self Assessment as they’d plan for Christmas - get organised, complete their to-do list with plenty of time to avoid that last minute rush. Just search ‘self assessment’ on GOV.UK to make a start.”

The easiest and quickest way to complete a tax return is online through your Personal Tax Account, where you can start your return and go back to it as many times as you like before submitting it. There is now also a HMRC app where you can get your Unique Taxpayer Reference (UTR), make Self Assessment payments and obtain your National Insurance number and employment history.

You can check if you need to submit a tax return here.

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