As you may know, the tax return deadline is getting closer with the final date of submission and payment for electronically submitted tax returns being 31 January 2017.
Collect tax through PAYE code:
When filing a tax return you can opt to pay your overdue tax by collecting it through PAYE (This means your tax code would bechanged to collect the tax each month straight from your wages). If this is something that you are interested in, the tax return deadline is brought forward to 30 December 2016. The advantage of this is that your tax will be collected over 12 months rather than a single payment on 31 January 2017.
Please note: This only applies if the tax you owe is less than £2,000.
Late submission of tax return:
If your tax return is submitted late there are different types of penalties that you will face depending on how late it is:
|Time scale||Amount due|
|After 31 January 2017||Flat rate of £100|
|Three months after deadline||£10 per day for 90 days (maximum £900)|
|Six months after deadline||The higher of £300 or 5% of the tax due|
|Twelve months after deadline||The higher of £300 of 5% of tax due|
These are all on top of the previous penalty, for example if you file your tax return on 31 May 2017 you will owe £100 for the first three months plus 31 days x £10 per day = £310 meaning your total penalty would be £410 on top of the tax that is due on your late return.
In serious cases HMRC could request for you to pay 100% of the tax due on top of the original tax- meaning you would be paying double the tax you owe.
There is an option to appeal against these penalties if there is a reasonable excuse that can be provided.
Late payment of tax:
If the tax is paid late HMRC can charge interest on the tax due; at the minute this stands at 2.75% (from 23 August 2016).
As well as interest, there are also late payment penalties:
|Time scale||%of tax paid late|
|Over 30 days late||5%|
|Over 6 months late||Further 5%|
|Over 12 months late||Further 5%|
As you can see there are many penalties that can arise if your tax return is not submitted and paid on time, therefore please try and get your tax return information to us as soon as possible so that these can be avoided.
If you would like any more advice on tax return submission, payment or calculations, please get in contact.
Jessica Cooper, Accounts & Tax