HER MAJESTY’S REVENUE AND CUSTOMS have mailed over 10 million letters to submit a 2010/11 self assessment income tax return. But individuals are running-out of time to file their 2010/11 tax returns, which are expected to be submitted by 31st January 2012.
A lot of people wish to take days off to check out the Christmas period; nevertheless, citizens must always be motivated to get their particular tax issues in order in good time. Abandoning your tax matters to the eleventh hour can result into unwanted anxiety, could result to penalty charges and interest and if something is incorrect or incomplete, you have almost no time to sort out problems.
Setting up with HMRC and Submitting your income tax return
Any kind of outstanding tax returns must be submitted online now, as the due date for the paper tax return of 31st October 2011 has now elapsed. Paper tax returns accepted by HMRC from 1st November 2011 forwards will instantly be given with a £100 penalty. And this penalty charge will apply even if there is no tax to pay or it is settled on time.
HER MAJESTY’S REVENUE AND CUSTOMS circulated a press release to advise citizens of the due date, and significantly, advise all of them to enroll for online filing as soon as possible, due to the fact it can take up to 10 days to obtain your Activation Code. Still in case you have submitted online in the past, make sure that you have actually your User ID and security password, as it can take up to 10 days to obtain a substitution.
Despite the fact that the due date for submitting self-assessment tax returns is 31st January 2012, individuals should abstain from abandoning it right until the last minute as HMRC’s webpage may encounter extreme user volumes close to the due date. Last year, more than 500,000 income tax returns were submitted online on 31st January 2011.
On the other hand, you could possibly authorize an accounting firm to manage your matters on your behalf. By authorising an accounting firm, they will be capable of submitting your tax return using the internet if they are listed as a tax agent with HMRC.
Up until eventually this year, an automated charge of £100 would definitely be issued for a late tax return. Nevertheless, this could be lowered- possibly even reduced to zero- if you paid your tax by the deadline or the tax debt was less than £100. However, a new penalty routine is applicable to late tax returns this specific year, which is below:
A preliminary £100 penalty charge, which will not apply even if there is less than £100 tax to pay or the tax due is settled on time
After 3 months, further daily penalties of £10 per day- up to a max of £900
After 6 months, an additional penalty of 5% of the tax due or £300- whatever is higher
After 12 months, a further 5% or £300- whichever is higher. In severe instances, the fee after 12 months can be up to 100% of the tax expected
Not alone are penalty charges a waste of your precious earnings, you do not get tax reduction for them either.
If you choose to use an accounting firm, not only should penalties and interest be avoided, but accountants may even be able to save or defer your tax.
Payment of Tax
If you are submitting your tax return using the internet, HMRC’s system will immediately determine your tax position for you, but as opposed to an accountant they will not recommend you if you have concluded something improperly, have strayed from accountancy guidelines or tax laws or have missed out on making claims for something.
HMRC are not going to assist you recognize tax savings that you could be making. Do not mistake tax computations with tax relief.
If you are considering to pay tax, this must be resolved by 31st January 2012 equally. Any repayment due should be released by HMRC either by cheque or bank receipt soon immediately after your tax return has been submitted. Please bear in mind of the many tax return electronic mail frauds that circulate at this time around of year.
An instalment on account (POA) might also be expected on 31st January 2012. POAs are obligations made by the taxpayer upfront to cover their tax burden for next year and are due in January and July. They are created to reduce cash flow and each of them is usually half of the last year’s tax liability – even though they can be lowered. POAs are only expected where your tax liability is:
considerably more than £1,000, or
less than 80% of your tax bill is met by tax taken off ‘at source’ (i.e. before you receive the income)– such as PAYE on employment earnings or the tax deducted from bank interest
For those setting out or hoping to plan their cash flow for upcoming years, it is recommended to put away about 20% to 30% of your revenues during the year to deal with your tax obligation. Savings of this degree should guarantee that most, if not all, of your tax bill, will be secured.
If you pay your tax late, HMRC will charge you interest on the amount past due. New charges can also be implemented for paying your tax late, which are:
5% of the tax overdue after 30 days
An extra 5% of the tax overdue after 6 months
An additional 5% of the tax overdue after 12 months
Using an accounting firm will take away the anxiety of filing tax returns and allow you to focus on operating your company. Not merely should penalty charges and interest be definitely avoided, but chartered accountants may even have the option to save or delay you tax. They can also keep you updated of your tax situation and abreast of any changes in the tax routine.
Disclaimer: The important information made available is dependent on present guidance (at date of publication) from HMRC and may be dependent on change. Any information discussed here is meant to notify rather than recommend. Taxpayer’s situations do vary and if you feel that the facts provided is helpful it is worthwhile that you contact us before application. If you take, or do not take action as a result of reading this content, before obtaining our written recommendation, we will accept no obligation for any monetary loss suffered.