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A Self-assessment (SA) tax return is usually required if a taxpayer has other income apart from regular PAYE income. Find out if you need to file a tax return.

Important Dates for Self-assessment

There are a number of dates to be kept in mind for SA. It is possible that all of them are not be relevant to you, but it is prudent to make a regular check which one applies to your circumstances so that you won’t miss any important deadlines.

5th October: Register for SA

If you have never filed a SA tax return previously, you must register to do so by 5th October of the following year in order to submit the tax return. For example: registration deadline for the tax year 6th April 2018- 5th April 2019 return will be 5 October 2019.

Self-assessment Deadline and Penalties

31 October: Paper tax return due

It is the filing deadline for paper-based tax return. Though, if you receive a notice from HMRC that you have to file a tax return, you'll need to return the completed form within three months of the date of issue on the notice. If you somehow skipped the deadline for filing your paper tax return, don't get tense to try and file it late. You still can complete it by online mode (these aren't due until 31 January) - but don't submit both.

30 December: Opt into PAYE

If you are filing your tax return online, you will need to submit it by this date if you have employment or pension income and want HMRC to collect the self-employed tax through your PAYE tax code. You can do this only if you owe less than £3,000.

31 January 2020: Online tax returns due

All tax returns must be filed online by this date. If you miss this deadline, a penalty would be levied even if you have no obligation to pay any taxes or have already paid all the tax you owe. See penalties section below.

Payments on Account (POAs)

POAs are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You have to make 2 payments on account every year unless:

  1. your last SA tax bill was less than £1,000
  2. you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

Each payment is half your previous year’s tax bill. Payments are due by midnight on 31 January and 31 July. If you still have tax to pay after you’ve made your POAs, you must make a ‘balancing payment’ by midnight on 31 January next year.

For example, the first payment on account for the 2019/20 tax year is due by 31 January 2020 and second would be by 31st July 2020 and balance if any, would be due by 31st January 2021.

Late-filing Penalties

You will be penalised with several penalties in case of late filing. For e.g. late payment of tax if any, late filing of returns and late notification of liability to pay tax.

Penalties for late filing

The penalties for late filing of a tax return could be as much as £1,600 or more accumulated over the first 12 months from the filing due date. A penalty could be levied even if you have no obligation to pay any taxes. If you miss the deadline for submitting tax return of 31 October following the end of the tax year (for paper returns) or 31 January next following (for on-line submission), you will get a penalty of £100, and you will not get any refund even if you don’t have any tax owe with the HMRC. For e.g. tax returns for the year ending 5 April 2019, should be filed by 31 October 2019 (for paper-based) or for the online purpose by 31 January 2020.

Refer below table for better understanding of penalties accumulate over the period of time.

Year ending

5 April 2019 (2018/19)

Normal filing date:

On paper

On-line

 

31 October 2019

31 January 2020

Penalties charged:

 

£100

 

Up to £900 (90 days at £10 a day from 3 months late)

 

£300 – 6 months late

 

£300 – 12 months late

 

(Total £1,600 or could be higher)

 

In exceptional circumstances a higher penalty of up to 100% of the tax due is possible

 

On-line

 

1 February 2020

 

From 1 May 2020 till 31 July 2020 at £10 per day

 

1 August 2020

 

1 February 2021

Payments of tax for SA

Where your SA return shows additional tax liability which is due by 31 January following the end of the tax year (i.e. the online filing deadline). In such a scenario, the individual generally requires making advance payment of tax for the following tax year. These are basically depending on the previous year’s underpayment and are due on 31 January in the tax year and on the coming 31 July. Any remaining balancing payment must be made by the following 31 January.

This payment sequence is best illustrated with an example:

The tax return filing deadline for 2018/19 is 31 January 2020. A tax return has been filed for 2018/19 which shows a significant underpayment.

This underpayment will be payable by 31 January 2020.

Two prepayments of tax called POAs for 2019/20 will also be required, one on 31 January 2020 and the other on 31 July 2020. Each POAs will usually be based on half of the prior year (in this case 2017/18) underpayment.

Once the final 2018/19 liability is calculated, the POAs are netted off and any balance will be left, is payable by 31 January 2020 (if the POAs exceed the final amount of liability, the excess will be repaid to the taxpayer with interest). And the order repeats year after year.

Late Payment Interest and Penalties

Penalties

If payments are not made on time, penalty is charged at the following rates:

Time delayed

Penalty

30 days

5% of tax unpaid at the date

Six months

Another 5% of tax unpaid

Twelve months

Another 5% of tax unpaid

Interest

If you pay your tax late, you will be penalised with interest at HMRC’s current late payment rate. For example: if your tax is due on 31 January and is not paid on time, interest will start applying from 1 February. You will also be charged interest on late payments on account (which should have been paid by on 31 January and 31 July).

Appealing against a penalty

If there are exceptional circumstances/reasonable grounds which you can explain- why you missed the tax return filing deadline, you can raise an appeal against the penalty within 30 days from the date of penalty notice. You can check/use the appeal form SA370 from the Gov.uk website.

Tips: If you think, there will be a delay in tax return, but you have a reasonable idea how much the tax amount will be, make that payment by the due date. If your approximation is right/close to that, all tax will be paid by on time, this will diminish the late payment penalties (but will not evade late filing penalties).

What if I have to prepare and file the tax returns for a few years?

You may normally only submit three years of late tax returns. For example, in the tax year 2018-19 (i.e. from 6 April 2018 to 5 April 2019) you may submit returns for 2017/18, and three late returns –2014/15, 2015/16 and 2016/17. In some cases, HMRC might process older returns if reasonable grounds are available for them to raise an assessment.

If you are stressed because you have a few outstanding Tax Returns and don’t know how to, we recommend you speak to an adviser. Please call us on 03300 88 66 86.

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