As we approach Christmas, a tax return is probably one of the last things on your mind, but with the self-assessment filing deadline fast approaching, the sooner you get your paperwork in order, the sooner you can relax and enjoy the festivities worry-free!
31 January 2019 is the key date for your diary, for both the submission of your self-assessment tax return, and the settlement of any outstanding balance for 2017/18.
Payments on Account
You may also fall within the Payments on Account regime. This is essentially two advanced payments towards your 2018/19 tax liability. Each payment is half your previous year’s tax bill with the first instalment due on 31 January along with your 2017/18 balancing payment. The second is due by 31 July 2019. Payments on Account apply where a balancing payment for the prior year is over £1,000 after all tax at source has been deducted, and less than 80% of the tax due has been deducted at source. It is therefore frequently relevant for self-employed, or those receiving large dividends.
If you believe that your liability for next year will be less, it is possible to reduce your Payments on Account. This needs to be notified to HMRC either through your tax return, or via a separate claim. This should be considered with caution, as any underpayment will attract interest.
Penalties
Late Returns: A late tax return will incur an immediate penalty of £100, even if no tax is due. After three months, there are additional daily penalties of £10 per day up to a 90-day maximum, equating to a staggering £900!
Late payment of the balancing payment: After 30 days, this will attract a penalty of 5% of the outstanding balance.
The penalties and charges only escalate with time, so it is important to get your information to us as soon as possible (if you have not already), to ensure the New Year starts without a tax headache!
Thanks to our Tax Advisor Ruth Taylor for putting this together.