31st January Deadline – what does it mean?
We have just passed the 31st January self-assessment personal tax return deadline – so what does it mean and how was it for you?
“I love deadlines. I love the whooshing noise they make as they fly by.”
Returns – what can we learn for the future
You have 10 months to put together and submit your return electronically, 7 months if you choose to submit a paper return. If you need to track down or chase information, then you officially have the time so do not waste it. Many other things can delay the preparation of your return – health, post, weather, electronic connections, so do not delay matters unnecessarily until the last minute.
Penalties for late submission of returns start at £100, and if it is a partnership return then that is £100 for each partner.
If returns are still not submitted by 1st May then further penalties of £10 per day are levied. This is irrespective of whether any tax is due!
Anyone can be asked to prepare and submit a self-assessment personal tax return, but the following people should expect to prepare a return every year.
- Self Employed earning over £1,000.
- Landlords earning over £1,000.
- Active company directors
- Those with investments and earning over £100,000.
HMRC send out most requests on 6th April but if in doubt about whether you have a return to submit, then contact HMRC or your accountant.
A self-assessment personal tax return gathers together all your income, reliefs and tax already paid and then assesses the tax due and if you have any further tax to pay or are due a refund.
The tax calculated per your return is your tax bill and will go onto your self-assessment tax account, accessible from your government gateway.
If that tax bill is less than £3,000 and you have payroll income, then you may ask for that tax to be deducted in monthly instalments from your wages over the next tax year.
Otherwise you will need to make payments to your self-assessment tax account to settle the bill.
Per your 2022 return for year ended 5th April 2022 that tax was due 31st January 2023
Payments on Account
If the tax due per your return, is over £1,000 and less than 80% of your tax has been deducted as source e.g. via the payroll, then HMRC will want payments on account towards your next tax bill.
Each payment on account towards next year’s bill is 50% of this year’s bill. The first will be due 31st January i.e. the same time as this year’s bill and the second 31st July
This means that as your business grows then suddenly you have a 150% tax bill as your tax go over this £1,000 threshold. Planning is the key as this is still 4 months after you earned the money, so you should have the money in you tax savings pot.
If you have not earned the money, then you can ask for these payments on account to be reduced.
There is no concession for not knowing how much to pay. You have 10 months to put together and submit your return electronically – and this will calculate your tax bill too.
If you decide to prepare your return on paper, then the deadline for that is 31st October so HMRC have 3 months to let you know the tax bill.
The earlier you prepare your return then the sooner you will know your tax bill.
But again planning as you go along is a very good idea, so you can save for your tax bill, or ask for payments on account to be reduced.
Interest is charged on late paid tax – from 1st February.
A 5% surcharge penalty is levied 28th February, and again 28th August, for unpaid tax, unless you have arranged payment via a time to pay agreement with HMRC.
There are lots of reasons why this is also called silly season.
- Everyone is madly running around trying to finish their returns.
- Everyone is being chased to meet this deadline.
- Accountants may not be able to spend as long on dealing with queries.
- The tax man puts everything else on hold.
- Software grinds to a halt
- And silly errors occur.
Moral – get your return done early so you can relax.
If you would like help with your personal tax return or know anyone who does then do contact us