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Consequences of missing the self-assessment tax return deadline and handling unaffordable tax bills

Missing the self-assessment tax return deadline in the United Kingdom can lead to a series of penalties and interest charges. It is essential to understand the consequences of missing the deadline and the steps to take if you cannot afford to pay your self-assessment tax bill. This article will outline the penalties for late submission and provide guidance on managing unaffordable tax bills.

Penalties for missing the self-assessment tax return deadline

If you miss the filing deadline for your self-assessment tax return, the following penalties may apply:

Late filing penalties:

  • If you miss the filing deadline by one day, you will be charged an initial £100 fixed penalty.
  • If your tax return is more than three months late, you will be charged an additional £10 per day penalty for up to 90 days, up to a maximum of £900.
  • If your tax return is more than six months late, you will be charged an additional penalty of either £300 or 5% of the tax due, whichever is higher.
  • If your tax return is more than 12 months late, you will be charged another penalty of either £300 or 5% of the tax due, whichever is higher.

Late payment penalties:

  • If you miss the payment deadline by 30 days, you will be charged a penalty of 5% of the outstanding tax.
  • If your payment is more than six months late, you will be charged an additional penalty of 5% of the tax outstanding at that time.
  • If your payment is more than 12 months late, you will be charged another penalty of 5% of the tax outstanding at that time.

Managing unaffordable self-assessment tax bills

If you cannot afford to pay your self-assessment tax bill, taking action as soon as possible is crucial. Consider the following steps:

Contact HMRC: Inform HMRC about your situation as soon as you know you cannot afford to pay your tax bill. They may be able to arrange a payment plan, known as a ‘Time to Pay‘ arrangement, which allows you to pay your tax bill in instalments over an agreed period.

Review your tax return: Double-check your tax return for errors or omissions that could have resulted in an incorrect tax liability calculation. If you discover any mistakes, submit an amended tax return to correct the errors.

Seek professional advice: Consult a qualified accountant or tax adviser to explore potential tax relief options or allowances that you may not have claimed, which could help reduce your tax liability.

Minimise future tax liabilities: Implement tax planning strategies and maintain accurate financial records to better manage your tax liabilities in the future. This may include making use of available allowances, claiming relevant expenses, and ensuring the timely submission of tax returns.

Conclusion

Missing the self-assessment tax return deadline can result in significant tax penalties and interest charges. It is essential to understand the consequences and take prompt action if you cannot afford to pay your tax bill. By contacting HMRC, reviewing your tax return, seeking professional advice (perhaps via an accountant), and implementing effective tax planning strategies, you can manage your tax liabilities and avoid severe financial consequences.

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