The clock is ticking for millions of UK taxpayers, with the 31 January 2025 deadline for self-assessment tax returns fast approaching. Despite ample warning, 5.4 million individuals are yet to file, putting themselves at risk of fines, interest charges, and even heightened scrutiny from His Majesty’s Revenue and Customs (HMRC).
Understanding Tax Filing Obligations for Various Taxpayers
The requirement to file a tax return is not reserved for the self-employed. It spans a wide range of taxpayers, many of whom may not even realise their obligations. Here’s who must file:
- Self-employed individuals earning over £1,000.
- Members of a business partnership.
- Individuals with total income exceeding £150,000.
- Taxpayers liable for capital gains tax or the high-income child benefit charge.
- Those with untaxed income from:
- Property rentals.
- Commission payments.
- Foreign income.
- Savings and investments over certain thresholds.
Failure to register for self-assessment in time—by October 2024 for first-timers—could result in a ‘failure to notify’ penalty, which may cost up to 30% of unpaid tax, or even 100% if deemed deliberate and concealed.
Important Deadlines and Penalties for Late Tax Returns
If you were hoping to file a paper tax return, the 31 October 2024 deadline has already passed. The only option now is to submit online before the 31 January 2025 cut-off. Failing to do so can result in mounting penalties:
| Delay Period | Penalty |
|---|---|
| Immediately after deadline | £100 flat fine. |
| 3+ months late | £10 per day, up to £900 total. |
| 6 months late | Additional 5% of owed tax or £300, whichever is higher. |
| 12 months late | Another 5% or £300, whichever is higher. |
Additionally, interest charges on unpaid tax are applied. Currently at 7.25%, these will increase to 8.75% in April 2025.
The Hidden Advantages of Filing Your Tax Return
While filing a tax return is legally required, there are hidden benefits to fulfilling this obligation:
- Filing allows you to pay voluntary National Insurance Contributions, which can boost your state pension.
- It proves your self-employed status, which is essential for claiming allowances like tax-free childcare.
- It offers a pathway to claim tax reliefs you may be entitled to.
The Importance of Notifying HMRC About Tax Return Exemptions
If you submitted a tax return last year but believe you no longer need to, you must notify HMRC. This must happen before the deadline, and HMRC must agree to your exemption. Otherwise, you are still required to file—even if you owe no tax.
Failing to do so could result in penalties, wasted time, and possible legal battles to reverse fines.
Navigating the HMRC Appeal Process for Missed Deadlines
HMRC does offer an appeal process for those who miss deadlines. You can appeal a penalty if you have a ‘reasonable excuse’, such as:
- Bereavement of a partner or close relative.
- A sudden hospital stay or dealing with a serious illness.
- Technical issues with the HMRC online service.
- Severe postal delays.
Appeals must be filed within 30 days using the SA370 form. If rejected, you can escalate the matter to the First-tier Tribunal, but be warned—this may result in additional costs, including covering HMRC’s legal expenses.
The Risks of Delayed or Inaccurate Tax Filings
Delays, inaccuracies, or missed filings come with more than financial costs. They raise red flags that can lead to investigations by HMRC. As Seb Maley, chief executive of Qdos, emphasises: “Unfiled, late or incorrect tax returns can increase the likelihood of being investigated by HMRC. Doing everything you can to meet this month’s deadline and submit an accurate tax return is vital.”
Got a reaction? Share your thoughts in the comments
Enjoyed this article? Subscribe to our free Newsletter for captivating articles, exclusive content, and the latest news.
