The days of the paper tax return could well be numbered as the HM Revenue & Customs’ begins rolling out its Making Tax Digital initiative from next year.
But until that time comes, if you do file by paper you still need to meet the 31st October 2017 deadline for the year ended 5th April 2017.
The number of small businesses and individuals who complete their tax returns by paper has been shrinking, meaning that today more than 80% of taxpayers prefer to file their tax returns online. Not only is it usually easier, it also gives more time to complete a tax return as the deadline for submitting a return digitally is 31st January.
While some taxpayers opt to leave their tax returns until the New Year, why not get yours done ahead of the holidays so you can relax over the festive period, without worrying about meeting that 31st January tax return deadline?
Preparing your records in advance for your tax return will give your accountant plenty of time to look at any tax planning opportunities you and your business may be eligible to receive, thereby letting you take full advantage of any tax reliefs and allowances and save you money.
When your tax return is ready, your tax liability can be calculated. Your income tax liability for your 2017 tax return is due by 31st January 2018, even if you file your tax return early. Therefore, the sooner you prepare your return, the sooner you can start looking at your finances and working out how much you need to put aside to meet your tax bill.
Getting your financial affairs in order well ahead of the deadline also means that you are far less likely to be hit with costly penalties either because the tax return was filed late or there was an error due to it being rushed.
Until it is known what changes will be made to the penalty regime once the Making Tax Digital has been completed, the current penalties remain the same if you submit your tax return late:
- An initial £100 penalty applies even if there is less than £100 tax to pay or the tax due is paid on time
- After three months, additional daily penalties of £10 per day – up to a maximum of £900
- After six months, a further penalty of 5% of the tax due or £300 – whichever is more
- After 12 months, another 5% of the tax due or £300 – whichever is more. In serious cases, the penalty after 12 months can amount to 100% of the tax due
Each of these penalties is in addition to one another, meaning a tax return filed 12 months late could be subject to penalties of at least £1,600 – and this could quickly rise, depending on how much tax is due.
You may also face interest and late payment penalties in addition to the penalties mentioned above if you pay your tax late. Tax payments are normally due on 31st January and sometimes the following 31st July, depending on the level of tax liability and what you have deducted at source.
You should avoid leaving your tax return until the last minute as this may cost you and your business dearly. Therefore, why not let the experts at your local TaxAssist Accountant look after your tax affairs and responsibilities?
TaxAssist Accountants can provide you with the following services:
- Register you with HM Revenue & Customs for Self-Assessment and any other area of tax applicable, such as VAT or registration as an Employer
- Prepare your tax return for you and consider any tax planning opportunities
- Calculate your tax liability and advise you of the amount and due date of any payments to be made
- Review HMRC correspondence and liaise with HMRC on your behalf. This can be useful if they are issuing you incorrect tax codes or are taking a long time to issue you your tax refund
Contact us today to find out more about what we can do for you on 0800 0523 555.
By Jo Nockels FCCA