As the deadline for self-assessment tax returns draws near, HM Revenue and Customs (HMRC) has enhanced its support services to assist taxpayers in meeting the January 31 deadline. With millions of self-employed individuals and those with multiple income streams required to file online, the tax authority is making a concerted effort to accommodate last-minute submissions.
Extended Support on Final Day
On the final day before the self-assessment deadline, HMRC has announced that its phone lines will remain open, and webchat services will be significantly expanded. Historically, the last day has seen a surge in filings, and in the previous year, over 1.1 million individuals failed to submit their returns on time. To mitigate this, HMRC is offering extended support, with the webchat service increasing its capacity tenfold and the telephone helpline operating from 09:00 GMT to 16:00 GMT.
Despite these enhancements, HMRC has faced criticism in the past for long wait times on its helplines. Taxpayers are advised to be prepared for potential delays when seeking assistance on Saturday.
Who Needs to File?
Taxpayers earning more than £1,000 from self-employment or rental income are mandated to submit their returns. Conversely, those who earn only through Pay As You Earn (PAYE) may not be required to file. Notably, individuals with an income exceeding £150,000, who previously filed due to their high earnings, may not need to submit this year if their only reason for filing was their income level.
It’s vital for all taxpayers to be aware that failing to file can result in missing out on potential tax relief. According to Sir Steve Webb, a partner at consultancy LCP, approximately 800,000 higher or additional rate taxpayers could forfeit valuable relief by not declaring contributions to personal pensions or other “relief at source” schemes.
Understanding the Penalties
Those required to submit a return must also ensure that any tax liabilities are settled by the January 31 deadline. Alice Haine, a personal finance analyst at Bestinvest, emphasised the importance of having sufficient funds available for tax payments, stating, “Filing the return is only half the battle – you must also pay any tax owed for the 2024-25 tax year.”
Failure to submit a return on time results in a fixed penalty of £100, regardless of whether tax is due. Additional penalties can accrue, including daily fines of £10 after three months, capped at £900, and further charges of 5% of the tax owed after six and twelve months. HMRC does consider reasonable excuses for late submissions, which may exempt individuals from penalties.
Taxpayers are also cautioned against scams, as fraudsters may impersonate HMRC, threatening individuals with unpaid tax bills or offering fraudulent refunds.
Upcoming Changes: Making Tax Digital
From April, significant changes will be implemented regarding tax submissions. Taxpayers with gross incomes exceeding £50,000 from self-employment or rental income will be required to adhere to Making Tax Digital regulations, which will replace the traditional self-assessment process. This includes maintaining digital records and submitting quarterly income and expense reports to HMRC. The income threshold for compliance will gradually decrease to £30,000 in April 2027 and £20,000 by April 2028.
Victoria Todd from the Low Incomes Tax Reform Group highlighted the urgency of preparing for these changes, stating, “Making Tax Digital is the biggest tax change since self-assessment and, with just over two months to go, time is running out to get ready.”
Why it Matters
The looming deadline for tax returns not only affects individual taxpayers but also reflects broader economic concerns as millions navigate the complexities of self-assessment amidst rising living costs. The enhancements to HMRC’s support services underscore the agency’s recognition of the challenges faced by taxpayers, especially during these financially strained times. As the tax landscape evolves with upcoming digital changes, it is crucial for all taxpayers to stay informed and compliant to avoid penalties and ensure they are maximising their potential tax relief.