Martin Lewis discusses late filing fee for tax self-assessment
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Nearly 12 million Britons need to file an annual tax return by January 31 each year, of whom a staggering five million leave it until the final month, figures from HM Revenue & Customs (HMRC) show. The deadline for filing your self-assessment return for the 2020/21 tax year is now just weeks away, so don’t keep putting off the dreaded job.
Take a break from leftover turkey and telly to get your tax sorted now, said Kevin Sefton, chief executive of personal tax app Untied. “It means you can start 2022 with a clear head.”
Between 30,000 and 700,000 people a day scramble to submit their forms in January, but nearly a million miss the deadline and get an automatic £100 penalty, with further fines to follow if they continue to dither.
HMRC delayed this deadline by a month last year to February 28 due to coronavirus lockdowns but there is no guarantee it will do so again.
You can avoid that penalty by taking the first crucial steps today.
If you do not have all the necessary information to hand, don’t let that put you off from starting.
Sefton’s advice is to fill in what you know as soon as possible, to build some momentum.
Leaving it to the last minute can backfire. “If you need to contact HMRC for any reason, help desk phone lines get busier as you get closer to January 31.”
This year’s tax return may be particularly complicated, said Dawn Register, tax partner at accountancy firm BDO. “Many taxpayers will have to report Covid-related support payments and claim deductions for the extra costs of working from home.”
If you received Covid support payments, such as furlough and Self-employed Income Support Scheme (SEISS), these are taxed as trading income and need to be reported on your return.
“If you were paid too much, you can correct this through your return,” Register added.
Those who made a loss for the year despite receiving Covid support can carry this back for up to three years to set against profits.
If lockdowns forced you to work from home during the tax year, you can claim a £6 weekly tax deduction for the extra costs.
Anyone who set up a new business or side hustle earning more than £1,000 during 2020/21 will need to show their income and expenses, Register said.
If you took advantage of the staycation boom to let out a property, you must report the rental income if it exceeded £1,000.
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Under the rent-a-room scheme you can earn £7,500 a year free of tax from renting out your own home, so check you qualify.
Register said you also have to disclose any gains from selling crypto-currencies like Bitcoin. “If you sold for more than you bought, you must pay capital gains tax on any gain above £12,300.”
Even if you profit was below that threshold, you must report any sale proceeds above £49,200 on your return.
Remember to disclose any gains from investment properties or second homes, and pay the necessary capital gains tax.
Higher and additional rate taxpayers who made a gift to charity and signed the Gift Aid declaration can claim the difference between basic rate 20 percent tax and their 40 or 45 percent rate, she added.
If you did not complete a self-assessment tax return last year you probably do not need to do so now, unless your circumstances have changed.
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