MILLIONS of Brits could face an extra 5% charge on their self-assessment taxes if they don't settle their bills before the end of this month.
HMRC can charge extra interest on self assessment tax that is paid late and can fine taxpayers £100 if they didn't file their return by the end of February, but you can appeal if you disagree with the taxman.
Most workers have their tax paid through their employer but if you are self-employed, or have untaxed income such as investments, you need to complete a tax return each year.
The self-assessment tax filing deadline was pushed back earlier this year from January 31 to February 28 due to the pandemic but any tax owed still had to be paid and there are interest charges if you are late.
An HMRC spokesman told The Sun that there were still 1.1million returns outstanding out of 12.1million as of the start of March, although there is no breakdown of how many haven't filed and how many haven't paid.
Taxpayers can still be charged interest worth 2.6% of the outstanding amount every day until the payment is made from February 1.
How do I complete a tax return
BEFORE you can complete and submit your tax return, you’ll need to have a unique taxpayer reference (UTR) and activation code from HMRC.
This can take a while to receive, so if it's the first time you're completing self-assessment, make sure you register online as soon as possible.
To sign in or register visit the "Self Assessment tax return" section of HMRC's website.
If you've already signed up for self-assessment, you can find your UTR on relevant letters and emails from HMRC.
HMRC accepts your payment on the date you make it, not the date it reaches its account – including on weekends.
So if you want to pay by bank transfer you can do so up until the evening of January 31, but it's best to get it out the way in advance.
If you need to change your tax return after you've filed it, you can do so within 12 months of the original deadline or you can write to HMRC for any changes after that.
Filling in your tax return can seem daunting, but with our step-by-step guide you'll have it sorted in no time.
For example, if you paid a £1,000 tax bill a year late, you would be charged £26.
Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on March 3.
But this year, because of the impact of the COVID-19 pandemic, HMRC has given taxpayers until midnight April 1 to either setup a payment plan or request more time to pay.
You can pay a tax bill or set up a monthly payment plan online through your self-assessment profile on Gov.uk.
This needs to do this by midnight on April 1 to avoid the 5% penalty.
How to appeal penalties for late filing or missed payments
HMRC will write to you if you didn't file by the end of February or it believes you didn't pay any or the correct amount of tax.
There is still a £100 charge if the tax return wasn't filed by February 28.
HMRC will say in a letter how much it believes you owe if it claims you missed a payment.
You can check these details by logging into your online self-assessment profile where you will need to provide your government gateway ID that you setup when you first registered.
Alternatively, you can phone HMRC on 0300 200 3310.
You will need to provide your national insurance number which will be on any letters from the taxman or on your payslip.
Any appeals must be sent within 30 days of the date HMRC sent you the penalty notice.
This can be done by post using an SA370 form or online using your government gateway account.
You will need the date the penalty was issued and the date you filed your tax return if you’ve filed it.
You can select whether you are appealing a late filing or payment penalty or both and you will need to provide a reasonable excuse.
Examples include if your partner or a close relative died shortly before the deadline or you had a serious or life threatening illness.
You can also argue that you were impacted by coronavirus, which has caused a delay in making the deadline, but HMRC doesn't have to accept this.
There is a box that lets you give a more detailed explanation if you think there has been a miscalculation but it may also be worth discussing this with HMRC on the phone or on its webchat service.
It can usually take 45 days for HMRC to consider an appeal.
If you use the online form you will get a reference number to track the progress of your appeal.
You can ask for the decision to be reviewed within 30 days by the tax tribunal if you do not agree with the outcome.
This can take up to two months
You don't have to pay the charges while your appeal is ongoing but remember you will need to if your claim is rejected.
What if I need more time?
HMRC has a Time to Pay arrangement which breaks down what you owe into monthly instalments to make it more affordable.
Due to the financial impact of the pandemic, it’s been made available to more people who are struggling to pay their tax bills this year.
HMRC says more than 97,000 people have already signed up for its Time to Pay arrangement.
To be eligible for the arrangement, the following must apply:
- You owe £30,000 or less
- You do not have any other payment plans or debts with HMRC
- Your tax returns are up to date
- It’s less than 60 days after the payment deadline (January 31)
You can choose how much to pay straight away and how much you want to pay each month. You’ll have to pay interest.
You can set up a payment plan online, choosing how much you want to pay upfront and how much you want to pay in instalments
Last year, HMRC hit hundreds of taxpayers with £100 late fines despite filing on time.
On Christmas Day, 2,700 Brits people filed their tax returns, in comparison to over 3,000 people who did the same thing last year.
While in February 2020, a woman got a £1,316 HMRC tax fine refunded after The Sun stepped in.
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