The deadline for filing self-assessment tax returns for the 2016/17 tax year was midnight on 31st January 2018. Any personal tax payments due also needed to be paid by this deadline. Have you still not filed your return or paid your self-assessment tax bill?
A record-breaking 93.5% of self-assessments due were filed before the deadline, however 745,588 were still outstanding as of 1st February 2018. There will be some individuals who still haven’t filed their tax return, or have but have not paid their bill.
If you haven’t yet filed your self-assessment tax return, you will have instantly incurred a £100 penalty if your return is up to three months late. This penalty goes up after three months, whereby you will start incurring daily penalties.
There are separate late penalties for failing to pay your self-assessment tax bill on time
If you pay your personal tax bill late, there are additional penalties you need to be aware of. However if you pay your bill within 30 days of the deadline, you may avoid a late payment penalty.
Here are the penalties to be aware of for late tax payments under self-assessments:
|Period of time late||Penalty|
|30 days late||5% of the tax due|
|6 months late||5% of tax outstanding|
|12 months late||5% of tax outstanding|
For example, if you owed £10,000 on your personal tax bill for the 2016/17 tax year, you would already owe an extra £500 penalty to HMRC for late payment as of 2nd March.
HMRC also charges interest on late payments
HMRC will charge you interest on both the amount of tax outstanding and the penalties levied against you up to that point. For example, if you are six months late paying your £10,000 self-assessment bill, you will still owe the tax plus a £1,000 late penalty and 1.5% interest (pro-rata – therefore half of the 3% statutory interest) of £165 on the total.
It is certainly not worth waiting to pay your self-assessment tax bill. However if you are unable to pay your bill, there are a few steps you can take.
What to do if you can’t pay your self-assessment tax bill:
It’s crucial to communicate with HMRC when you are late in paying your tax bill – or if you can’t pay on time. Don’t wait to receive a payment demand in the post; contact HMRC for advice via the Business Payment Support Service. They can be contacted via telephone on 03002 003835 Monday to Friday 8am to 8pm, or 8am to 4pm on weekends.
If you have told HMRC you are unable to pay your tax bill on time, an HMRC representative will ask questions to determine if you should be allowed to make instalments. In the case where you did not pay on time but are deemed to be able to do so, HMRC may simply ask you to pay the full tax bill immediately plus any penalties owing.
If HMRC allows you to make instalments on your tax bill or gives you more time to pay, it will arrange for you to make payments via Direct Debit. HMRC does not accept personal credit cards for tax payments.
If you fail to remain up to date with your tax payments or fail to pay altogether, HMRC could take payment enforcement action against you. Enforcement action can include:
- Collecting what you owe through PAYE earnings
- Getting debt collection agencies involved
- Taking you to court
- Taking control of possessions you own and selling them to pay the debt (in England, Wales and Northern Ireland)
- In more extreme cases, HMRC could take action to recover the tax owed directly from your bank account or building society
Remember, it’s your responsibility as a contractor and limited company director to ensure that your own self-assessment is filed and your tax bill paid. The simplest way to avoid any late payment penalties is to file your self-assessment as early as possible, keep on top of the deadlines and stay in touch with your accountant.
Have you missed the self-assessment deadline and are unsure of what to do next, or are you late paying your self-assessment tax bill? Contact our expert Personal Tax team on 01707 871622 or email email@example.com, and we’ll happy to advise you on the service you require.