HMRC has issued a strong warning to UK households as it prepares to impose £100 fines starting in January 2025 for anyone missing the Self Assessment tax return deadline.
The clock is ticking, with just over a month remaining until the January 31st deadline. If you have yet to file your 2023 to 2024 tax return, it’s crucial to take immediate action to avoid hefty penalties and interest charges.
In this blog, we break down the essential details about HMRC’s penalties, potential exemptions, and what you need to do to stay compliant.
Why is HMRC Issuing £100 Fines for Missed Tax Returns?
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HMRC is issuing £100 fines for missed Self-assessment tax returns to encourage timely compliance. The penalty will be applied if individuals fail to file and pay their tax return by midnight on January 31, 2025.
The initial fine is £100 for returns that are up to three months late. If the return is even later, further penalties will be added. Additionally, late payments will incur interest charges on the outstanding amount.
These penalties are designed to ensure that taxpayers meet their financial obligations to the government and to discourage delays in filing and paying taxes.
HMRC aims to promote efficiency and fairness in the tax system by enforcing strict deadlines, making it crucial for individuals to file and pay their taxes on time to avoid unnecessary fines and interest.
What Are Some Common Reasons People Miss the Deadline?
Despite best efforts, various factors can prevent individuals from meeting the deadline. HMRC recognizes a range of “reasonable excuses” that may help taxpayers avoid penalties.
These include:
- The death of a close relative or partner just before the deadline.
- A serious illness or unexpected hospitalization that prevents tax filing.
- Software or technical issues while preparing your tax return.
- Service disruptions from HMRC’s online systems.
- Events like fire, theft, or flood that affect the ability to file on time.
If one of these valid reasons applies to you, HMRC allows you to appeal the penalty by providing supporting documentation.
However, excuses like forgetting to file or relying on someone else to submit your return are not acceptable.
How Can You Appeal Against an HMRC £100 Fine?
If you miss the self-assessment deadline and receive a penalty, you can appeal to HMRC if you believe you have a reasonable excuse for the delay.
To appeal, you must file your tax return and make any payments as soon as the issue preventing you from filing is resolved.
Keep in mind that you cannot claim a missed payment or reminder as an excuse for lateness. Acceptable reasons for appealing include health problems, unexpected hospital stays, technical failures like computer issues, or external delays such as postal problems.
HMRC considers these as valid reasons if they prevent you from meeting your tax obligations on time. To avoid fines, ensure that once the issue is resolved, you file your tax return promptly, as delays after that could incur additional penalties.
What Should You Do If You Can’t Pay Your Tax Bill by January 31st?
If you are unable to pay your Self Assessment tax bill by January 31st, HMRC offers a “Time to Pay” scheme that allows taxpayers to spread their payments. If you owe less than £30,000, you can set up a payment plan online without contacting HMRC directly.
For amounts over £30,000, you will need to contact HMRC to arrange the plan. It is crucial to file your tax return before setting up the payment plan. Once filed, you can spread your payments over a maximum of 12 months, providing flexibility to those who may be facing financial difficulties.
This option can help alleviate the stress of paying the entire bill at once while ensuring you meet your tax obligations. Ensure to set up the plan well before the deadline to avoid penalties.
What Are the Consequences of Missing the Self-Assessment Tax Return Deadline?
Missing the Self-assessment deadline without a valid excuse can lead to severe consequences. Initially, you will incur a £100 fine for returns up to three months late.
If the delay exceeds three months, additional penalties will apply, and you will be charged interest on any unpaid tax. The longer the delay, the more you’ll owe, significantly increasing your financial burden.
HMRC’s penalties are designed to encourage compliance and ensure that taxpayers meet their obligations. In addition to the fines, late payments will accrue interest, which can quickly add up.
It is essential to file your tax return on time, even if you are unable to pay immediately. Doing so helps to avoid the increasing penalties and interest charges.
Conclusion
The January 31, 2025, deadline for Self-assessment tax returns is fast approaching. HMRC is taking decisive action to ensure compliance by issuing £100 fines and charging interest on late payments.
If you are unable to meet the deadline, remember that HMRC provides options for payment plans and reasonable excuses for delays.
By filing your tax return on time or seeking an extension if necessary, you can avoid penalties and keep your tax obligations in check.
Stay proactive and make sure to file your return before the deadline to avoid any unnecessary financial burdens.
