Get set for Self-Assessment

10th December 2019

With less than two months left until the 31 January deadline for online returns, self-assessment is very much on our minds as December and January are when things ramp up in our tax department.

Self Assessment

We always ensure our clients get their returns in on time, however this can mean extra long days to ensure we achieve this. According to figures released by HMRC, 735,258 returns were submitted on 31 January 2019 with 60,000 of those landing in the last hour of the working day.

There’s an added urgency this year due to the complication of Brexit. At present, the UK is scheduled to leave the EU on the same date as the self-assessment deadline, which could cause more problems for HMRC than usual.

From HMRC’s perspective, there are various advantages to nudging people towards filing their returns ahead of the deadline day, not least that it reduces the risk of IT systems failing due to overload.

Who needs to submit self assessment tax returns?

Whether it’s renting out a property, undertaking freelance work, driving a cab or selling online, more British people are making a bit of extra money through a bolt-on to the day job. Recognising this, and keen to keep things simple, a £1,000 trading allowance was introduced for ‘micro-entrepreneurs’ making a small amount of money through trading or ‘odd jobs’. But if you earn over this threshold as a self employed ‘sole trader’ or are a partner in a business partnership you need to submit a self assessment tax return. You can use HMRC’s tool to check if you need to submit one at gov.uk/check-if-you-need-tax-return.

Those with more complex financial situations, such as the owners of multiple businesses or serious property investors, may find completing a tax return more challenging, especially if they want to claim all the tax reliefs to which they’re entitled. However, your accountant will be able to provide solid guidance on how to make the most of the tax reliefs available, as well as keeping you compliant.

Can I submit my return in the post?

The deadline for submitting paper returns via the post was the 31 October 2019. Even if the deadline hadn’t already passed, submitting digitally is much more efficient than completing a paper return. At HB&O we are driving all of our clients to become digital, in-line with the HMRC drive for processes to become fully digitalised in the next few years. One of the many benefits of online returns is feedback is fairly instant and on screen in-front of you, meaning most errors are headed off before you hit ‘submit’.

As digitalisation becomes the norm, the proportion of returns filed online keeps growing. In 2017/18, more than 10 million tax returns were submitted online, representing 93.5% of the total.

The aim is that – probably within the next decade – all taxpayers will be keeping digital records which interface seamlessly with government tax systems, perhaps making the self-assessment tax return a thing of the past.

What happens if I don’t submit by the deadline?

If you don’t file by midnight on 31 January, you’ll immediately be issued with a £100 fixed penalty. That applies even if the reason you’ve been putting off your return is because you don’t think there’s any tax to pay. After three months with no return, you’ll face penalties of £10 for each day after that second deadline – up to a maximum of £900. After six months, then 12 months, the fines ramp up, with additional charges of 5% of the tax outstanding or £300, whichever is greater. There are also penalties in place for the late payment of tax.

Despite the constant reminders, the relative ease of the online process, and the willingness of accountants to support people through the process, 731,186 taxpayers missed the midnight deadline on 31 January 2019. That equates to an astronomical £73 million in day-one instant fines.

If you need assistance in completing your self assessment tax return, or advice on going digital,  contact our tax team as soon as possible on 01926 422292.