The self assessment deadline is drawing near, and anyone who is newly self-employed or has additional income for the tax year 2014/15 needs to register by Monday.
Failure to register on time can result in penalties of up to 30% of the tax due, or more in some cases, unless payment is made by January 31. To register, go online at: https://www.gov.uk/register-for-self-assessment
Imogen Hilton-Brown, partner and head of the Bristol-based private client tax team at accountancy, investment management and tax group Smith & Williamson, pictured, said: “Registering for self-assessment enables HMRC to assign a unique tax reference (UTR), and sparks the issue of a tax return. 
“Returns are usually due by January 31 if done online – or October 31 for those who use paper forms – or within three months from the issue of the return notice, if later. The UTR number is then used to track the return and eventual tax payment.”
More than 10m people filed a self-assessment tax return for 2013/14 and this number is expected to increase due to an increasing number of people having a second income stream, from buy-to-let enterprises to selling items online for profit, or owing the high income child benefit charge, coupled with roughly one in seven individuals now being self-employed.
“Although Britain is set to overhaul its tax returns system through digitisation, don’t forget that’s not happened yet and if anyone wants to send it in on paper then returns are due by October 31 – or three months after requested by HMRC, if later,” said Imogen.
“While HMRC waived a number of late tax return penalties in 2015 it should not be relied upon to do the same in 2016. There are a number of deadlines and charges associated with tax returns so it is important to remain aware of them to avoid being fined.”
Anyone newly self-employed with income of, for instance, £50,000 in 2014/15 you will need to pay tax and class 4 National Insurance of £19,262 (£12,841 plus a payment on account for the next year).
Failure to notify HMRC about this by October 5 could result in a penalty of up to £3,852. For anyone who notifies HMRC but then misses the tax return and payment deadlines, other penalty charges would start to rocket as follows:
| Lateness |
Late return |
Late payment |
Total penalties |
| Miss the tax return deadline |
£100 |
£100 |
|
| Tax unpaid by 2 March |
5% of unpaid tax = £642 |
£742 |
|
| Tax return 3 months late |
Daily penalty £10 per day for up to 90 days = £900 |
£1,642 |
|
| Tax return 6 months late |
5% of the tax on the return or £300, if greater = £642 |
£2,284 |
|
| Tax unpaid by 31 July |
5% of unpaid tax = £642 |
£2,926 |
Imogen added: “While missing the notification deadline may not automatically cause a penalty to arise, should anyone still pay the appropriate tax by the due dates, there is a very real possibility of HMRC being unable to assign their payment appropriately without the UTR.
“The consequences could be late fines or payments, which may prove challenging to recoup. It is vital to contact HMRC if you think you may need to file a tax return.”
