The 2013/2014 Self Assessment tax return deadline is upon us.
After midnight on 31st January, £100 penalties will appear, as if by magic, for thousands of late filing taxpayers. Whilst a pantomime style “Booooo!” may well accompany this news, Christmas spirit has been packed away with the decorations and it’s time to prioritise your 2015 ‘To Do’ list.
Your ‘Do tax return’ point probably nestled somewhere between ‘put up decorations’ and ‘order turkey’ during December’s organisational marathon. But now is the time to get it out from under ‘use new juicer daily’ (never going to happen!) and ‘learn something new’ and position it right at the top – or its going to cost you!
January 31st – the deadline for two important tax points
- Filing your Self Assessment tax return.
- Making the final payment on your tax bill from 2013-14.
Self Assessment tax return 2014
The tax year runs from April to April and the tax office send out returns at the end of each tax year. You then have to possible deadline options. One is to submit your return by post by the 31st October – which, for this year, you have obviously missed! Now you have to take the second option which is to submit your return online by 31st January. Some taxpayers deliberately choose this option because it gives them more time and because they can use the help within the online service to complete their form.
It is largely the self-employed and those with complex income streams that earn above a particular threshold that need to file a self-assessment tax return. But if you work under PAYE and have work expenses of over £2500 you will also need to submit a return. If your financial situation changes then you are required to get in touch with HMRC and they will issue you the required return. For example, if you establish your own business and become self-employed then you must inform the tax office 3 months from when you begin working.
Be warned – submitting online does NOT mean that you can leave it all until 30th January. You need to get organised now, not least because you will first need to register for HMRC’s online service. This means that you need to get onto online.hmrc.gov.uk/registration/individual NOW and then wait for a couple of days for your ‘activation code’ to arrive by snail mail. Your account must be activated within 28 days of receiving your code.
You will also need your National Insurance number or post code and your Unique Taxpayer Reference (UTR) number to unlock your account. A UTR is 10 digits long and can be found on your ‘notice to complete a tax return’ letter that HMRC sent you or on your tax return. If you’ve – ahem! – ‘misfiled’ your user ID since last year then you can get another one online using your password and UTR number. HMRC have a helpline dedicated solely to taxpayers having problems with the online service – 0300 200 3600. Just pop to the loo and get a cuppa before you embark on the queuing! They are yet another understaffed, overworked government department and you might have a bit of a wait.
So once you are registered you can begin the fun part of actually filling in the self-assessment return form! It is wise to prepare for this by gathering all your evidence first. Get any and all financial statements and records of all your income sources to hand before you start. For example, savings and investment statements, bank statements and work diaries.
If you miss the 31st January deadline it is an automatic £100 penalty – what a waste of your hard earned cash! But you still need to get it done as fast as possible – you can accumulate as much as £1,600 worth of fines for late filing. The longer you leave it, the higher the amount.
Paying the tax you owe
As stated, the 31st January is also the deadline for paying off the bill for the tax year that ended on the previous 5th April. There are more fines for the late payment of your taxes. You have 30 days grace then you will be fined 5% of the amount of tax you owe. Add another 5% after 6 months and 5% again if you end up 12 months late. You will also have to pay interest on any tax or fines owed. This awful snowball of ever increasing debt to HMRC will only stop when everything is paid.
If you usually fill in a self-assessment tax return, you will already know that these taxpayers usually pay their tax in two amounts during the year. Unfortunately this means that you may also be paying your first ‘payment on account’ on 31st January as well as settling up your old tax bill.
You can’t afford to avoid this deadline. Things are tight enough at this time of year without basically throwing £100+ away because you are playing ostrich. As the wise Margaret Mitchell said in her epic novel ‘Gone With the Wind’, “Death, taxes and childbirth! There’s never a convenient time for any of them.”
