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The UK Tax Return System: Submission Dates and Penalties

Updated: Oct 16, 2023


Understanding the UK tax return system is vital for anyone with earnings or income within the United Kingdom. Whether you are self-employed, have a second source of income, or have various financial gains, understanding when and how to file your tax return, and the potential penalties for non-compliance, is essential.


How Does the UK Tax Return System Work?

In the UK, the tax return system is managed by Her Majesty's Revenue and Customs (HMRC). The system is designed to collect Income Tax from individuals who have various forms of income. Typically, individuals who are employed under the Pay As You Earn (PAYE) system are not required to file a tax return as their tax is automatically deducted from their wages.

However, individuals with other forms of income, such as self-employment or rental income, are usually required to file a tax return. Filing a tax return involves submitting a SA100 form declaring your income(s), calculating the tax you owe, and then paying that tax to HMRC.


Submitting Tax Returns: SA100

The SA100 is the primary tax return form that individuals use to report their income details to HMRC. It incorporates income from varied sources, including employment, self-employment, rentals, dividends, and other income, along with claimable allowances and reliefs for a specific tax year. The SA100 can be submitted either on paper by 31st October or online via the HMRC portal by 31st January following the end of the tax year.


Tax Calculation Summary: SA302

Once the SA100 is processed by HMRC, they generate the SA302, a tax calculation summary. It provides a detailed overview of the total income received and the amount of tax owed. Often, the SA302 is used as proof of income for applications like mortgages or loans, validating the income declared on the SA100 and confirming the tax amount calculated by HMRC.


Key Dates for Submission

For each tax year running from 6th April to 5th April the following year, you must submit your tax return and pay any tax due by specific dates. Here are the key dates:

  • 31st October: Paper tax returns must be submitted by this date.

  • 31st January: Online tax returns and any owed tax must be submitted and paid by this date for the previous tax year.


Making Tax Digital for Income Tax

HMRC is introducing the Making Tax Digital (MTD) initiative, aimed at creating a more efficient and effective digital tax system. Expected to be mandated from April 2024, MTD for Income Tax will require taxpayers to use software to keep digital records and update HMRC quarterly through the MTD service, making tax management, reporting, and payment more streamlined and accessible.


Late Submission and Payment Penalties

Failure to meet these deadlines can lead to various penalties from HMRC, which can become quite severe over time:

  1. Late Submission Penalty:

    • £100 fine if your tax return is up to 3 months late.

    • Additional £10 per day fines, up to a maximum of £900, if your return is more than 3 months late.

    • Further penalties of £300 or 5% of the tax due, whichever is higher, are applied for returns six months and 12 months late.

  2. Late Payment Penalty:

    • 5% of the unpaid tax at 30 days, 6 months, and 12 months late.

    • In addition to the penalties, HMRC charges interest on the outstanding amount from the due date until payment.

  3. Interest on Late Payment:

    • HMRC charges daily interest on any unpaid tax from the due date until it’s paid at the current rate.


How to Avoid Penalties

To avoid any unreasonable penalties, consider the following steps:

  • Maintain Accurate Records: Keep detailed and accurate records of your income and expenses throughout the tax year to avoid any delays in filing your tax return.

  • Be Aware of the Deadlines: Take note of the submission deadlines and ensure your tax return is filed on time.

  • Seek Professional Advice: If you are unsure about any aspect of your tax return, consult a tax advisor or an accountant who can provide guidance and assistance.

Conclusion

Navigating the UK tax return system can be challenging, but understanding the system, being aware of the key submission dates, and knowing the potential penalties for late submission and payment are essential to avoid unnecessary financial burdens. By staying informed and proactive, and seeking professional advice when needed, individuals can ensure they remain compliant with HMRC requirements and avoid any unreasonable penalties.

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