At the end of January each year, completing your Self Assessment is one of the last things you want to be doing, but it is crucial that you do it! It is estimated by HMRC that in January 2021 1.8 million people missed the 31st January deadline, which is close to double what it was the previous year. This means that HMRC collects millions in fines from all the late filings including penalties and interest.
For your Self Assessment, you can complete it as early as mid-June as soon as you have the information required to complete it (including a Form P60, P45, P11D, and all your income and expenses). As highlighted below there are many reasons to complete your Self Assessment early including:
- Time to complete your Self Assessment
For your Self Assessment, unfortunately, it is not as easy as going online to a website and simply filling in a form. Part of the process includes HMRC expecting a return from you, meaning you have to register in advance. There are two parts to the registration. You get sent a Unique Taxpayer Reference (UTR) in the post, then you use your UTR to register for HMRC Online Services. The second part includes HMRC sending you a PIN in the post to access the Online Service which is where you can file your Self Assessment. This process can take around a fortnight to get sent to you (out of peak times) but in January when everyone is rushing to complete it, the process could be longer. In the future when HMRC rolls out online tax accounts, it will make the process simpler but for now you have to do this two-step process.
- Time to save for your tax bill
Even if you complete your Self Assessment early, your tax bill is still due on January 31st. This means you could have up to six months to budget for the tax you owe. If you do not make sure you have enough for the tax bill, you will be fined £100.
As highlighted in the point before, filing early helps you to avoid penalties by having time to fix any problems. In January 2021, there were helpful changes to fines from HMRC due to Coronavirus but it is highly unlikely to continue this year. HMRC penalties for the Self Assessment normally include:
- £100 fine if you miss the January 31st deadline
- £10 per day fine (for up to 90 days) if you still haven’t filed by 30th April
- £300 fine or 5% of the tax you owe (depending which is the greater amount) if you still haven’t filed after another 90 days
- An additional £300 fine or 5% of the tax you owe (depending which is the greater amount) if you still haven’t filed within a year
- Other penalties include up to 100% of owed tax if HMRC believe if you are intentionally delaying your filing
- HMRC’s call centres tend to get overwhelmed
Close to the deadline, HMRC’s personal tax helplines will be backed up so you will be queuing. With increasing pressure due to Coronavirus and the introduction of new customs requirements from Brexit, the backlog will increase. From September to November 2020, around 1 in 5 callers (almost 400,000) did not even get through to HMRC and abandoned their calls.
For your Self Assessment you need:
- Bank statements
Also, if you file in January you’ll need records going back almost two years which is difficult to get off some banks.
If you are currently struggling to complete your Self Assessment, get in touch with us at AIT Accountants, we will be able to take these burdens off your hands. Contact us at email@example.com