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Tina Riches, national tax partner at Smith & Williamson, said: “Failure to register on time can result in penalties of up to 30 per cent of the tax due, or more in some cases, unless you pay the tax by January 31.
“Registering for self-assessment enables HMRC to assign you 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 that use paper forms – or within three months from the issue of the return notice, if later. The UTR number is then used to track your return and eventual tax payment.
“Over 10 million people filed a self-assessment tax return for 2013/14 and this 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 you want to send it in on paper then returns are due by October 31 - or three months after requested by HMRC, if later.
“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 your tax return so it is important to remain aware of them to avoid being fined.”
“If you’re newly self-employed with income of, say, £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). If you fail to notify HMRC about this by October 5 you could get a penalty of up to £3,852.
“While missing the notification deadline may not automatically cause a penalty to arise, should you still pay the appropriate tax by the due dates, there is a very real possibility of HMRC being unable to assign your 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.”
Register online here.
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Susie Hughes © Shout99 2015
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