The countdown is on to complete your self-assessment by the tax return deadline, but more than five million people still haven't filed with just weeks to go, according to HMRC.
Taxpayers are up against a ticking clock to ensure that they file their tax returns online and pay any money owed to HMRC by 31 January.
More than 40,000 people used the festive period break to file their returns, HMRC reports, with 4,409 canny people avoiding peeling the sprouts by filing on Christmas Day. The taxman said another 38,260 filed on New Year’s Eve and 24,828 filed on New Year’s Day. In total, 12 million people were due to file a return to HMRC by the end of January and 5.4 million forms are still due, HMRC said.
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Some people may not even realise that they have fallen into the self-assessment net. In 2024, an estimated 1.1 million customers missed the deadline to file their tax returns, according to HMRC data. During the 2022-2023 tax year, late filing penalties totalled £220 million (although this reflects the total amount of fines paid during that period, not the amount raised in fines specifically due to late filings in that particular tax year).
HMRC figures published on 21 October 2024, 100 days before the self-assessment online tax return deadline, showed that just 3.5 million people had filed their returns. Anyone who misses the tax return cutoff – midnight on 31 January – could face a £100 penalty.
Frozen thresholds and lower tax allowances mean more people could be expected to file self-assessment tax returns this year. This is because personal tax allowances have remained the same while dividend and capital gains tax thresholds 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, by 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.
There is still time to submit your return before the end of January but the later you leave it the harder it will become to address any queries.
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.
“One key to watch this tax year is if the frozen income tax thresholds have pushed you into a new tax bracket,” says Sarah Coles, Head of Personal Finance at Hargreaves Lansdown.
Additionally, fiscal drag could mean that people who didn’t even file a tax return last year now need to do so. The personal tax allowance has been frozen at £12,570 until at least April 2028.
Pensioners
Recipients of the full state pension only need a little more income to be pushed into the basic tax threshold, thanks to recent increases in state pension amounts while the personal tax allowance remains frozen.
The maximum state pension rose to £10,600 in the 2023/2024 tax year, so anyone filing before 31 January with more than £2,000 in extra income on top of a full state pension will need to file a tax return.
This time next year, though, more people will be caught in this situation as the maximum state pension increased to £11,500 in the 2024/2025 tax year, meaning that £1,000 of extra income will be enough to need state pensioners to file a tax return. With the maximum state pension increasing still further to £11,970 in April 2025, anyone making just £500 extra income on top of this will need to file a tax return in January 2027.
Higher earners
You may not have to complete a tax return if you are employed and your main income is through a regular salary but don't forget about your pension.
Research by PensionBee suggests that hundreds of thousands of higher and additional rate taxpayers forget to claim back pension tax relief to the tune of around £250 million each year.
The basic rate of tax relief is added automatically to pension contributions but higher and additional rate taxpayers may need to claim the extra 20 or 25%.
Gary Smith, financial planning partner at Evelyn Partners, says: "Many savers completing tax returns are so focused on making sure they are not caught out by HMRC for under-reporting taxable income or assets, that they forget to collect pension tax relief they are owed and lose out on a substantial rebate.
"Others have no other reason to get involved in self-assessment but they need to remember that they might have to for this purpose – although it is possible to claim back tax relief without having to complete a tax return.
Investors
Similarly, the dividend allowance was halved from £2,000 in 2022/2023 to £1,000 in 2023/2024, so anyone who earned more than this in dividends last year will need to file a tax return this January. Next year, the threshold is falling again, so January 2026 filers with just £500 of income from dividends will need to file a tax return.
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 falling to £3,000 in the 2024/2025 tax year, meaning you can keep less income from the sale of assets, such as shares.
Savers
Rising savings rates could even push you over the personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher earners.
Side Hustlers and Landlords
If you have a second job, or a 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.
When is the self-assessment deadline?
There are two UK self-assessment tax return deadlines:
31 October: deadline for paper tax returns
31 January: deadline for online tax returns
The forms must be submitted by midnight on the deadline date. Any tax owed also has to be paid to HMRC by that date.
The fine for filing the return late is £100, even if the return is late by only 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.
Make sure you can 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 make arrangements with HMRC if you can’t afford your tax bill.
“If you can’t pay your tax on time, you can take advantage of a Time to Pay arrangement, which lets you spread the repayments,” says Coles. “However, it’s worth knowing that you have to pay interest on any money you owe HMRC, which is set at the Bank of England base rate plus 2.5%. Given that rates still remain relatively high, it means interest is currently 7.25% – so there’s a price to pay for this.”
“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.
“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’re a new higher-rate taxpayer you may need to reclaim the extra tax relief on pension contributions or gift aid on charity donations,” says Coles. “You may also need to pay tax on more of your savings income or pay tax at a higher rate on things like dividends.”
- If you run a limited company there may be allowable business expenses such as expenses for travel or stationery.
- Sole traders may also be able to claim for certain expenses such as petrol costs or 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 your spouse, if they earn less than you, could also reduce your bill.
- Making pension contributions and putting money into an ISA can also shelter money from the taxman.
How can HMRC help you file your tax return?
HMRC told MoneyWeek that "there are no restrictions on the type of queries we will deal with [via the phone helpline] but we strongly encourage customers to use our quick and easy-to-use online resources to help them complete their tax return, including:
- HMRC’s digital assistant - the assistant will help you find information, and if you can’t find what you’re looking for you can ask to speak to an adviser during opening hours
- guidance notes and help sheets
- YouTube videos provide a wealth of information, with specific playlists on filling in your tax return, and your online tax return (a section-by-section guide)
- live webinars where you can ask questions or if you can’t join, you can watch recorded webinars on demand, or on YouTube
- the HMRC app and the HMRC online account - you can instantly find your Unique Taxpayer Reference, make a Self Assessment payment, get your National Insurance number and get your employment income and history for your tax return
- the online tax return includes integrated help and support and provides links to guidance and videos every step of the way if you need more help.
- technical support for HMRC online services for help signing into HMRC’s online services
- email updates - subscribe to HMRC email updates so you don’t miss out on the latest information on Self Assessment
- social media updates - follow HMRC on X, Facebook, Instagram and LinkedIn to get the latest updates on Self Assessment services and useful reminders
- HMRC’s Self Assessment community forum — post any questions you have, get an answer and read similar posts that already have a reply
- HMRC Customer Support on X (Twitter) — for general questions about Self Assessment (do not include your personal or financial information in your post)
- if you need extra support to help you with Self Assessment you can get support from HMRC or contact a voluntary or community sector organisation who can provide you with help and advice."
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