Martin Lewis discusses late filing fee for tax self-assessment
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HMRC requires individuals who work for themselves and who have earned more than £1,000 throughout the last tax year to complete what is known as a self assessment tax return. Self assessment tax returns are used by the Revenue to collect Income Tax. While tax is usually automatically deducted from wages, pension and savings, those with other income are required to report it through a tax return. It informs HMRC how much Income Tax and National Insurance a person is required to pay for the previous tax year concerned.
However, there is an important deadline looming which requires Britons to take action in order to ensure all of their affairs are in order.
Those who need to complete a self assessment return, have their responsibilities to register with HMRC. This must be done by October 5 after the end of the tax year.
For example, if a person is required to complete a tax return for the April 2020/21 tax year, they must register by October 5, 2021, which is just under two weeks away.
Those who already completed a self assessment return last year will not be required to register again this year, but certain individuals will still need to act.
Britons will need to register, and the quickest way to do so is online, but individuals can also complete an online form, or phone HMRC.
People will need to confirm their employment status and provide their business’ tax account details, alongside their Government Gateway user ID as well as a password.
Once a person has registered, they will be provided with a Unique Taxpayer Registration (UTR), which is a 10-digit number that HMRC uses on a self assessment tax return as well as other correspondence.
The Revenue will then reach out to individuals to provide them with an activation code for their account.
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This can be activated at any time after it is received, with individuals required to file their tax return by January 31, 2022, if online, or October 31, 2021, if filing a paper return.
The October 5 deadline is particularly important as if Britons do not register, or register late, they may have to pay a penalty.
Even if a registration is submitted a day late, it could run the risk of a penalty fine of £100. This can increase for the longer it is left unregistered.
Understandably, this is something Britons will want to avoid as much as possible, and so taking action soon will be vital.
HMRC will often reach out to people to let them know they need to submit a tax return, and when they will be required to take action.
But ultimately, the onus is on the individual concerned, and they will need to declare openly all forms of income that are required for tax to be paid on.
Once registered, people will need to send their tax return, and this must be completed by the aforementioned deadlines as well.
For those who did not send an online return last year, extra time of up to 20 working days will need to be left to register first.
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Self employed individuals are also actively encouraged to keep detailed records, for example bank statements or receipts, so they can fill in their tax return correctly.
HMRC then takes action to calculate what a person owes based on the sums they report through their self assessment.
HMRC explains: “How much tax you pay will depend on the Income Tax band you’re in.
“There’s a different rate for Capital Gains Tax if you need to pay it, for example, if you sell shares or a second home.”
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