Do you use the old familiar “I work better under pressure” when almost at the end of a deadline?
Is there a bit of residual “I don’t want to look like the swot handing my homework in early” left over from secondary school?
Or is the prospect of filling in your tax return just so daunting that an ostrich impersonation is the best you can manage?
You’re not alone…
When it comes to filing Self Assessment tax returns. We all know the deadline is 31st January and we all know there are fines if you miss it. Maybe you were one of the 569,847 people who filed in the last 24 hours of January 31st 2014. A quarter of those required to file a Self Assessment tax return only made it in the last 4 days before the deadline. Then of course there were the 710,000 people who missed the deadline entirely and earned HMRC a nice little number in fines.
This isn’t about making things easier for the Tax Office, this is about why filing early is beneficial to you!
Avoid self assessment late fines
- HMRC has fined people over £70 million over the last 6 years – just for missing the deadline.
- Missing that 31st January deadline gets you an instant £100 fine, even if it’s only one day.
- From the 31st January you will be penalised £10 per day for every day it is not filed by 30th April. This continues for up to 90 days.
- If you still haven’t completed a further 90 days after 30th April you are smacked with either £300 fines or 5% of your total tax bill – whichever is the larger amount.
- HMRC also have other penalties they can add to a growing total if they think that you are holding up filing your Self Assessment tax return on purpose. This does include the possibility of 100% of the tax you owe.
The unreliability of HMRC’s systems
- The tax office never come out of the Self Assessment period with an unscathed reputation. There always seems to be something that highlights its inefficiencies. For example, in 2012 the deadline had to be extended by 2 weeks because HMRC’s own call centre staff went on strike on the 31st January!
- HMRC’s website for completing your Self Assessment tax return, Online Service, processed 12 returns per second at the busiest times. But, rather unsurprisingly, it too was not 100% reliable.
- As the Self Assessment deadline approaches the waiting times on the phone helplines becomes difficult. Sometimes they are unable to deal with the volume of calls with common waiting times being too long by most peoples standards. HMRC investigated this internally and, in a report from March 2014, they admitted that a quarter of all calls are not answered at all. So, if you want to talk to the right person at the right time, you need to file early!
Spread the cost of your income tax bill
If you owe income tax the earlier you file the more months you have to spread out the cost of your final tax bill.
Possible tax back through self assessment
If you have overpaid your tax then HMRC owe you money. This should be paid back to you quite soon after you file your tax return. A little unexpected windfall to save or splurge.
Be a winner!…maybe…if it all pans out…
In 2012, as a counterbalance to the penalties ‘stick’, the government proposed a ‘carrot’ to encourage people to file early. They suggested that anyone who files their Self Assessment tax return before the end of November would be in with the chance of winning £100,000. Unfortunately this hasn’t yet been put into action, despite the success of a similar competition to encourage people to pay their Council Tax be direct debit. The prize here was £25,000 and saved the local authorities involved £350,000. Keep an eye on our website and we’ll let you know if it actually materialises.
Stress Relief
In a recent advert HMRC propose that filing an early Self Assessment tax return will enable you to “find inner peace”. Advocating meditative enlightenment through the taxation process is more likely to provoke a burst of laughter than an early tax return! To most people a sense of calm and dealing with HMRC are mutually exclusive concepts.
But patronising publicity campaigns aside, you can relieve this considerable worry by just getting it over with. You don’t have to do it alone, just give us a call and we’ll help you with the paperwork, we’ll talk to the tax office for you and we won’t give you any meditation advice!
There are now at least 1 million more people who need to file a Self Assessment tax return than there were 4 years ago – and most of them feel like you! A recent survey found that 1 in 5 small business owners would say they were “anxious” about completing their return. And a concerning 1 in 20 feel “terrified” by the prospect. No wonder so many people only just meet the deadline or miss it altogether. Filing early also takes the pressure off the Christmas financial strain, so you can actually enjoy the festivities without the ghost of Christmas tax returns hovering over your head.
Tony Shanks