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19 January 2023

Tax Return Deadline is Fast Approaching

FAQ: I may not be in a position to file my personal tax return for the year ended 5th April 2022 and pay the amount of tax owing by 31 January 2023. What happens if I miss the filing deadline and don’t pay the tax due?

The deadline for completing your 2021/22 self-assessment tax return online is 31 January 2023 and those who file one later than that will usually have to pay a fine.

HM Revenue and Customs (HMRC) announced at the start of January that almost 5.7 million individuals are yet to file their returns and could face late-filing penalties if they don’t meet their reporting obligations. HMRC expect over 12 million tax returns for the 2021-22 tax year. The deadline for paper-based 2021-22 self-assessment tax returns has already passed, so anyone yet to file must do so online.

Penalties for late tax returns

Any taxpayer that files a 2021-22 self-assessment tax return beyond the 31st  January 2023 deadline will be hit with an immediate £100 fixed penalty. This is owed even if there is no tax due, or if the tax due is paid on time. HMRC has stated it is more likely to be lenient towards individuals with genuine excuses for failing to file returns. Those who offer a reasonable and fair excuse for missing the deadline can potentially avoid the £100 late-filing penalty.

As the tax return deadline approaches, taxpayers should bear in mind the recent increase in interest HMRC will charge on late paid tax. HMRC have recently increased the interest rate it charges on unpaid income tax, national insurance, capital gains tax, stamp duty, corporation tax and inheritance tax by 0.5 percentage points to 6% following last month’s Bank of England base rate rise. The rate now stands at a 14-year high and is more than double what it was last January, when it was 2.75%. However, those owed money by HMRC will receive just 2.5% interest, up by two percentage points since January last year.

Taxpayers with unpaid income tax should understand that delaying payment has a real cost to it to avoid being charged 6% interest on the unpaid amount. It does seem unfair that those who have overpaid their tax cannot expect a windfall as HMRC has always maintained the 3.5% discount from the late payment rate to the interest on overpaid tax.

As well as being aware of the fines and penalties which apply when a tax return is submitted late you should also remember that HMRC also charge penalties for late payment of tax as follows:

  • 30 days late – 5% of tax due.
  • More than 5 months after the first penalty – 5% of outstanding tax due at that date.
  • More than 11 months after the first penalty – 5% of outstanding tax due at that date.

Our advice to those who are struggling to pay their tax bill on time and in full is to communicate with HMRC and look to set up a Time to Pay payment plan to pay it in instalments, and this can help mitigate your exposure to penalty charges. Early contact with HMRC is advisable to prevent enforcement action being taken against you. It should be borne in mind that a Time to Pay arrangement will not avoid interest being charged on the outstanding taxes.

Here to Help

The team at FPM are here to help with all your finance and tax queries. If you need advice or assistance on completing your tax return then please get in touch. 

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Contact Malachy

Malachy McLernon / Partner

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