Question:

“I am a freelancer and haven’t filed my personal tax return yet for 13-14. I know it’s late but what fines / interest am I going to receive?”

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Answer:

This information is based on the rates that are in place at the date of this article, Feb 2015.

As soon as you have missed the 31st January deadline for filing your self-assessment tax return in nearly all cases you will be fined a fixed penalty of £100.

This penalty remains at £100 until 30th April – after this point the fines accrue at a further £10 per day for the next 90 days making a the total fine at this stage £1000. If at this point the tax return is still outstanding an amount the larger of £300 or 5% of the tax due is added. At 12 months the same penalty is added again.

Interest and surcharges will also accrue on the tax outstanding at a rate of 3% per annum. However, there are a couple of key dates that trigger a further 5% surcharge on any outstanding amounts. These dates are 30 days after the original due date and 31st July 2015. If you have a time to pay arrangement already in place with HMRC it will override any interest and surcharges mentioned.

For example, if you filed your 13-14 tax return on 1st February 2016 (it was due by 31st January 2015) and owed £1,000 in tax which you planned to settle at the same date, the following amounts would be owed.

late filing example

These amounts could be larger if it is calculated that you should have made tax payments on account in the year. To help reduce your tax make sure you are claiming all the allowable expenses that you can.

As you can see the penalties can be high even on fairly modest tax liabilities. If your tax return is already late for 2013-14 we advise you get in touch with an accountant like us as it will give us the opportunity to assist you in avoiding any further penalties.

Also it might be worth considering a simple book-keeping system such as FreeAgent which will really help you keep on top of your finances going forwards.