ALMOST 2million people have been spared a £100 fine for failing to file their tax return before the end of January, but many could still be charged interest on money owed.
MoneySavingExpert’s Martin Lewis has warned that HMRC can still charge daily interest equal to 2.6% per year if you haven’t paid your self-assessment tax bill yet.
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For example, if you paid a £1,000 tax bill a year late, you would be charged £26.
HMRC can also charge a late payment penalty, starting at 5% of what is owed from March.
Mr Lewis said in his weekly newsletter: “HMRC is waiving £100 fines for people who file returns after the January 31 deadline but by the February 28 cut-off.
“But 2.6% interest is still charged on outstanding tax from February 1, so many should consider paying an estimate ASAP even if they haven’t done their return, and fail to do it before March 3 and there’s a 5% fee on top.”
How do you know if you need to submit a tax return?
SELF-assessment is a system HMRC uses to collect income tax.
Tax is usually deducted automatically from wages, pensions and savings, but people and businesses with other incomes must report it in a tax return.
We’ve made a list of who it applies to below:
- Earned more than £2,500 from renting out property
- You or your partner received high income child benefits and either of you had an annual income of more than £50,000
- Received more than £2,500 in other untaxed income, for example from tips or commission
- Are self-employed sole traders
- Are limited company directors
- Are shareholders
- Are employees claiming expenses in excess of £2,500
- Have an annual income over £100,000
Before you can complete and submit your tax return, you’ll need to have a so-called unique taxpayer reference (UTR) and activation code from HMRC.
This can take a while to receive, so if it’s the first time you’re completing self-assessment, make sure you register online immediately and ask HMRC for advice.
To sign in or register visit the “Self Assessment tax return” section of HMRC’s website.
Most workers have their tax paid through their employer but if you are self-employed, or have untaxed income such as investments, you need to complete a tax return each year.
The self-assessment tax return deadline is usually January 31.
But HMRC has extended the filing deadline to February 28 due to the pandemic and scrapped the usual £100 penalty for sending the document late.
However, this only applies to filing the document and the tax bill still had to be paid. You can use HMRC’s tax calculator to estimate your bill.
HMRC has said 10.7million people filed their return by January 31 and 1.8million didn’t.
Self-assessment customers usually face a penalty of £100 if their tax return is up to three months late.
Further fines of £10 a day are applied after three months, up to a maximum of £900.
For payments late by six months, you’ll be fined 5% of the tax you owe or £300, whichever is greater.
You can calculate how much your fine will be on the Gov.uk.
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Last year, HMRC hit hundreds of taxpayers with £100 late fines despite filing on time.
On Christmas Day, 2,700 Brits people filed their tax returns, in comparison to over 3,000 people who did the same thing last year.
While in February 2020, a woman got a £1,316 HMRC tax fine refunded after The Sun stepped in.
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