Tax return deadline: Will you get your self-assessment forms in on time to HMRC?

Self-assessment taxpayers have just one day left to file their tax return on time and avoid a £100 penalty.

More than 12 million people are due to file a return to HMRC by the end of January and some may not even realise that they have fallen into the self-assessment net.

HMRC figures at the start of January showed there were still 3.8 million people who hadn't filed their return and could face a £100 penalty for failing to do so by midnight on 31 January.

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There are risks to leaving it until the last minute, especially as HMRC's helpline is only reserved for priority calls so you could face long waits to get through or have to find information online.

Accountancy specialist RIFT highlights that 8% of taxpayers missed the deadline last year. While this figure was down from 19% the year before, it still equates to an estimated 1 million people.

Some may not even realise they need to complete a return.

Frozen thresholds and lower tax allowances means more people could be expected to file self-assessment tax returns this year. 

The Office for Budget Responsibility (OBR) has forecast that 1.2 million more taxpayers will need to complete a self-assessment tax return this year and 700,000 more next year.

This is because personal tax allowances have remained the same while dividend and capital gains tax threshold have been reduced, potentially making more people liable for tax  as they earn more due to fiscal drag.

High earners may also need to complete a self assessment return to get extra pension tax relief on contributions.

The taxman is also keeping a close eye on extra income people are making through selling items online or renting out properties

Digital platforms like eBay, Vinted and Airbnb are now required to report information about the income of users directly to HMRC. 

This could mean thousands of people who earn a bit of extra income are caught out by the taxman if they haven’t declared it.

HMRC figures show 4,757 spent Christmas Day submitting their 2022/2023 tax return to HMRC.

Over the three-day festive period, 25,769 customers submitted their tax return, with 8,876 filing on Christmas Eve and 12,136 on Boxing Day. The peak time was between 12:00 and 12:59 on Boxing Day, when 1,121 returns were sent to HMRC.

The taxman said 25,593 customers filed their tax return on New Year's Eve, with the most popular time being between 12:00 and 12:59, when 2,677 customers filed

Another 127 customers saw in the New Year by filing their tax return between 00:00 and 00:59 on 1 January, while 23,724 customers filed on New Year’s Day, with the most filing between 15:00 and 15:59, when 2,354 customers filed.

There is still time to submit your return before the end of January but it may be tricky if you have queries.

Due to staffing shortages, HMRC has said its helpline will only deal with urgent queries now until the self-assessment deadline, pushing people to use its guides and online support to address issues.

“This year, if you try to contact HMRC with a query it feels can be solved easy online, it won’t help unless you’re a vulnerable customer,” says Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.

“It means if you call for things like updating your personal details, checking if your self-assessment registration has been done or asking for your unique taxpayer reference number, you’ll be sent to the website instead.

“On the one hand, it removes the endless irritation of hanging on the phone. On the other, it could take longer for you to track these things down.”

Here is what you need to know to meet the self-assessment deadline.

Who needs to file a self-assessment tax return?

Any untaxed income above certain allowances has to be reported to HMRC.

If you are employed and only receive income from a regular salary then HMRC will usually take any tax owed automatically each month from your payslip.

But if you are self-employed or have income from other sources such as a buy-to-let portfolio or dividends, then these may need to be reported to HMRC through self-assessment.

Some groups may not realise that they need to complete a tax return as frozen thresholds and lower allowances push more people into paying tax.

The personal tax allowance has been frozen at £12,570 until at least April 2028.

The state pension for the 2022/2023 tax year was £9,600, so you only need a bit more income to be pushed into the basic tax threshold. This will become more likely as the state pension rises further. It was £10,600 in the 2023/2024 tax year and is due to increase to £11,500 from April 2024.

Similarly, the dividend allowance was £2,000 for the April 2022/2023 tax year and has been cut to £1,000 for the current tax year, giving you a lower amount that you can earn from shares dividends tax-free.

The capital gains tax threshold for the 2022/2023 tax year was £12,300 but has also been cut to £6,000 for this tax year and is set to fall to £3,000 from April 2024, giving you less income to keep from the sale of assets such as shares.

Rising savings rates could even push you over the personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher earners.

If you have a second job, or so-called “side hustle” such as selling items online or renting out a property or room through Airbnb, you also have to report any earnings above £1,000 to HMRC.

Parents may also need to file a self-assessment tax return. 

If you or your partner earn more than £50,000, you have to give some of it back in tax payments on a self-assessment form, known as the High Income Child Benefit Charge.

HMRC charges you 1% for every £100 of earning between £50,000 to £60,000.

The money has to be given back in tax charges if either you or your partner earn more than £60,000.

It may be worth checking with HMRC if you are unsure but be warned that its helplines are under pressure with callers waiting hours due to low staffing.

 “The government’s stealth tax raid means millions more people will be dragged into paying new taxes this year, which inevitably means yet more strain on HMRC’s already overburdened phone lines,” says Laura Suter, head of personal finance at AJ Bell.

“A litany of tax changes from frozen tax bands, to reducing tax-free limits for wealth taxes, to higher returns on savings all mean that more people are paying more tax – and often for the first time ever.

“People who have never filed a self-assessment or haven’t dealt with a particular tax before are far more likely to need additional support, meaning calling HMRC’s helplines.”

Suter says it is unsurprising that penalties for late filing of tax returns or late payment of tax are rising, with more than 1.4 million taxpayers charged interest by HMRC for late payment of tax in the 2020/2021 tax year.

“We’d expect this to surge as more taxpayers are pushed into self-assessment and paying tax – with many not realising they even need to file a return,” she adds.

When is the self-assessment deadline?

There are two self-assessment deadlines.

Paper forms have to be returned by the end of October, so that deadline has passed.

That leaves the online deadline, which is midnight on 31 January.

The forms have to be submitted and any tax owed has to be paid to HMRC by that date.

There is a £100 fine for filing the return late, even if it is only by one day.

This increases to a £10 daily charge after three months and a further 5% of any tax owed, or £300 if greater, after six months.

Don't forget about payments on account

It isn’t just tax for the previous tax year that HMRC wants you to pay.

Technically, if you are self-employed and filing in January then you have already earned nine months of income since the start of the current tax year without paying tax.

To cover this, HMRC sets another charge known as payments on account to put towards the current tax year’s bill.

HMRC estimates how much you owe based on your latest self-assessment return and then splits this into two payments with one due on 31 January and the other at the end of the following July.

Can you afford your tax bill?

Knowing how much you owe now also means you can budget and ensure that money is set aside so you can pay the bill on time.

It also gives you time to setup a Time to Pay arrangement with HMRC if you can’t afford the bill.

“The important thing is to submit your self-assessment tax return and be on time,” says Mike Parkes, technical director at GoSimpleTax.

“The earlier the better, and then if you think you’ll be short come 31 January you might be able to set up a Time to Pay Arrangement with HMRC. This lets you spread the cost of your tax bill by paying what you owe through affordable monthly payments based on your income and expenditure.

“Time to pay is based on an individual’s specific financial circumstances, so there is no ‘standard’ time to pay arrangement. HMRC will establish your ability to pay using an ‘income and expenditure’ assessment. This looks at your income, disposable assets and expenditure to calculate your disposable income.”

How to reduce your tax bill

There are ways to reduce your tax bill.

If you run a limited company there may be allowable business expenses such as for travel or stationery.

Sole traders may also be able to claim for certain expenses such as petrol costs or for energy bills when working from home.

You can reduce your bill by making charity donations and making use of tax allowances on savings, dividends and capital gains.

It may be too late for this year’s deadline, but shifting assets to a lower-earning spouse could also reduce your bill.

Making pension contributions and putting money into an ISA can also shelter money from the taxman.