Like all accountants we are beginning to build up to the January deadline for submitting tax returns. The deadline is January if the tax return is submitted electronically. However, there is a nearer deadline looming.
October 31st is an important deadline in two circumstances:
1. It is the deadline for submitting your tax return on paper
2. It is the deadline for informing the tax office that you are required to submit a tax return if you have not already been issued with one
Self Assessment means exactly what it says. It is your responsibility to assess your tax position and to inform the tax office if you are within the self assessment system. It is then your further responsibility to assess the tax that you are due to pay, and to then accurately inform the tax office how much this is, and to pay that amount, by the due date in the correct format.
This is important as there are severe penalties payable if you fail to meet the deadlines. For instance, the following penalties are payable if you fail to send in your paper tax return by 31st October or your electronic return by 31st January:
- If you are 1 day late then you will pay a penalty of £100
- If you are 3 months late then further penalties of £10 per day up to a maximum of £900
- If you are 6 months late then you will pay the higher of £300 or 5% of the tax payable
- If you are 12 months late then you will pay the higher of £300 or 5% of the tax payable
By that time, you will have incurred penalties of at least £1,600 even if you do not owe any tax. It is therefore essential that you check whether you need to complete a return if you have the slightest suspicion. We cannot cover all reasons why you will need to submit a return in this article, but the main ones are:
- You are either self employed or a company director
- You receive £10,000 in rental income, or £2,500 after deducting expenses
- You receive £10,000 in savings or investment income, or £2,500 if they are untaxed
- You receive any foreign income liable to UK tax
- You are over 65 and are only entitled to a reduced rate age-allowance
- You wish to claim employment related expenses in excess of £2,500
There are other less common circumstances, but always remember that it is your responsibility to ensure that you complete a return if you are required to do so.
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in these and other matters, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.