An important tax deadline is looming
Martin Lewis has issued an urgent warning to people about a fast-approaching tax deadline. Taxpayers have only days remaining to submit their self assessment tax return online. The cut-off date falls on Saturday, January 31, to file your return for the previous tax year. You can file your tax return through the Government website if you are self-employed or if you are not self-employed but you still send need to send in a tax return.
According to HMRC guidance, you need to file a tax return for the previous 2024/2025 tax year in several cases. This includes if you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on) or if you were a partner in a business partnership. You also need to file a tax return if you had to pay capital gains tax when you sold or ‘disposed of’ something that increased in value, or if you had to pay the High Income Child Benefit Charge and do not pay it through PAYE.
During a recent episode of his BBC podcast, Mr Lewis highlighted the looming end-of-January deadline. He said: “If you miss it, you risk an £100 fine and crucially, 7.45% interest, a heavy rate of interest.
“That’s an annual rate of interest that will apply for each day that you’re late to pay the actual tax.” The money-saving expert was accompanied on his podcast by two tax specialists, including chartered accountant Rebecca Benneyworth.
A listener whose husband had passed away in January posed a question. She said she wasn’t feeling up to dealing with her tax return given her tragic circumstances, and queried whether she still needed to meet the end-of-month deadline.
Ms Benneyworth explained that she would indeed still be required to submit her self assessment by then, though there could be a route to avoid the £100 penalty. Ms Mellon explained: “The £100 fine can be waived if you have what is called a reasonable excuse for a failure. I think the recent death of her husband means that she does have a reasonable excuse.
“If you don’t file it, then you will get a letter with a penalty in, probably around the end of February, saying you haven’t filed your tax return, here’s a £100 bill. But with that will be information on how to appeal against the penalty.
“Use the words ‘reasonable excuse’, explain that your husband died and you’ve been dealing with that, and I think that will get that penalty cancelled.” However, the tax expert issued a warning about how this process works.
She explained: “One thing to remember is, that you’ve got a reasonable excuse now, but if you then don’t file it until say, September, I think HMRC’s view would be that reasonable excuse had come to an end at some point. If you don’t file it, then you will get a letter with a penalty in, probably around the end of February, saying you haven’t filed your tax return, here’s a £100 bill.
“So the sooner the better you feel up to dealing with it, or getting someone to help you with it, so that you can cancel any fines. Yes there might still be interest on any tax that might be due, but the main thing is to remember to do this appeal. Look out for the letter and then do your appeal within 30 days, and the fine will be cancelled.”
You usually have 30 days from the date your penalty was issued to get in touch with HMRC or make an appeal. If you miss the deadline, you will need to give a reason why you did so.
What counts as a ‘reasonable excuse’?
Guidance on the Government website lists 10 things that may count as a ‘reasonable excuse’ for not getting your self assessment in on time, or otherwise missing a HMRC deadline:
- Your partner or another close relative died shortly before the tax return or payment deadline
- You had an unexpected stay in hospital that prevented you from dealing with your tax affairs
- You had a serious or life-threatening illness
- Your computer or software failed while you were preparing your online return
- Issues with HM Revenue and Customs (HMRC) online services
- A fire, flood or theft prevented you from completing your tax return
- Postal delays that you could not have predicted
- Delays related to a disability or mental illness you have
- You were unaware of or misunderstood your legal obligation
- You relied on someone else to send your return, and they did not.
What are the penalties if you file your self assessment late?
You will be charged an initial penalty of an £100 fine, but the penalties ramp up if you continue to delay paying your dues to HMRC. After three months, HMRC adds an extra daily penalty of £10 a day, up to a maximum of £300.
After six months, a further penalty of whichever is greater of either 5 percent of the tax due or £300, is added to your bill. If you still haven’t settled the debt after 12 months, another 5 percent is added or another £300, whichever is greater. The 7.75 percent interest rate applies to both the amount you owe and these extra penalties.
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