It’s getting to the time of year when procrastination is alive and thriving as the deadline for self-assessment tax return submissions looms.
To be fair, clients of Rackham’s Accountants don’t tend to find themselves waking in a cold sweat over this matter. Our well-honed system of reminders means that most clients submit well ahead of the deadline. If you’re not a client (yet) or are just browsing for general information, here are a few pointers to help you get your return sorted.
The clock is ticking
The date in question is midnight on Wednesday, 31st January 2024. That’s the latest time by which HMRC can receive a completed and signed tax return from you. They must also receive full payment for any tax you owe for the tax year from 6th April 2022 to 5th April 2023. You can submit after this date, but there’ll be a late submission fine to pay and daily interest accrues on any outstanding tax you owe.
Late payment of tax owed, expect more, and more fines
HMRC interest rates are set in legislation and are linked to the Bank of England base rate. There are two rates: late payment interest, set at base rate plus 2.5% and repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’).
HMRC has a calculator tool for working out penalties for late tax returns and tax payments.
https://www.gov.uk/estimate-self-assessment-penalties
In 2022, approximately 600,000 people missed the deadline and were fined, even if they didn’t owe any tax. This was, however, significantly lower than the reported 2 million plus late submissions the previous year.
HMRC is offering many forms of support
HMRC is trying to get this figure down even lower this year. Since early autumn, we’ve noticed a flurry of activity to help individuals and businesses get their tax affairs organised ahead of the last-minute rush.
With around sixty more days to go to the deadline, HMRC has been bombarding in-boxes with invitations to digest webinars and guides, submit online enquiries and use the help section of their website on every tax topic imaginable.
They’ve even sent out emails telling business owners that they’ll continue to get support emails until HMRC receives their completed online tax return.
There’s no dodging this…
Even if you had nothing to pay last year and believe you’re either fully paid up or have no tax liability for the 2022-23 tax year, you still have to submit a tax return by law.
…but there may be help to spread your tax bill
HMRC acknowledges that the past year has been tough, particularly for SMEs. Paying a large tax bill in one lump sum can have a real impact, not only on cash-flow, but on future business investment.
That’s why HMRC has announced that it is open to discuss the possibility of setting up affordable payment plans. This potential business lifeline is open to individuals or small business owners who owe less than £30,000 in tax. It’s not a case of not paying the bill and expecting HMRC not to notice for a while–you have to be pro-active in having a conversation with them about your ability to pay and your options.
Remember that the rules and allowances may and probably will have changed since the last time you submitted a return. It takes time to familiarise yourself with what you can and can’t claim.
Prioritise time to get ready
We asked a small business owner to track their activity regarding getting the necessary information together for us to prepare their self-assessment tax return.
This relatively simple individual case involved compiling information regarding their business sales, expenses and allowances. They also received rental income from an investment property, plus their personal saving, investments, and pension contributions. As a well-organised small business owner with basic bookkeeping knowledge and using a digital platform, they reported spending around 12-15 hours bringing everything together.
With sixty days to go, we can forgive you for not reaching for the panic button just yet! However, finding a ‘spare’ 12-15 hours (minimum) is tough going for any small business, especially if the next two months are usually your busiest trading period.
Don’t let procrastination catch you out
Excellent sources of further information include our previous blog posts on the topic, the link to sign-up for HMRC email notifications and the HMRC self-assessment online guides.
https://subscriptions.hmrc.gov.uk/
https://www.gov.uk/government/publications/self-assessment-tax-return-sa100
