The most common reasons that a tax return may be required are as follows:
- You are self employed or a partner in a partnership
- You are a company director
- You have untaxed savings or investment income
- You own land or property that is being let
- Your household receives Child Benefit and you have income in excess of £50,000
- You have income from overseas
- You have sold or given an asset away
- You’ve lived or worked abroad or aren’t domiciled in the UK
HM Revenue and Customs (HMRC) must receive your online tax return for the preceding tax year by 31st January. Paper tax returns have a deadline date of 31st October. A tax year runs from 6th April to the following 5th April.
- If you miss the filing deadline date of 31 January (for on-line submission), you will be charged a penalty of £100, even if no tax is owing.
- If you are three months late, you will be charged a daily penalty of £10 per day, up to a maximum of £900; i.e. from 1st May
- If you are six months late there will be a penalty of £300 (or 5% of the tax owing if this is greater)
- If you are 12 months late, you will be charged another £300 (or 5% of the tax owing if this is greater). In exceptional circumstances a higher penalty of up to 100% of the tax due is possible
- 5% of tax unpaid after 30 days
- Another 5% of tax unpaid after 6 months
- Another 5% of tax unpaid after 12 months
If you have a new source of income on which there is a tax liability, you should notify HMRC by 5th October following the end of the tax year in which the income arose.
If HMRC is not notified in time ‘failure to notify’ penalties can apply.
Payments on account are advance payments towards your tax bill. You have to make 2 payments on account every year unless:
- your last self assessment tax bill was less than £1,000
- you’ve already paid more than 80% of all the tax you owe, for example through your tax code
Each payment is half your previous year’s tax bill with payments due by 31st January and 31st July.
If you still have tax to pay after you’ve made your payments on account, you must make a balancing payment by 31st January next year.
Your bill for the 2016 to 2017 tax year is £3,000. You made 2 payments on account last year of £900 each (£1,800 in total).
The total tax to pay by 31st January 2018 is £2,700. This includes:
- your ‘balancing payment’ of £1,200 for the 2016 to 2017 tax year (£3,000 minus £1,800)
- the first payment on account of £1,500 (half your 2016 to 2017 tax bill) towards your 2017 to 2018 tax bill
- You have to pay your second payment on account of £1,500 by 31st July 2018.