5.4m yet to submit tax returns

The clock is ticking on 5.4m taxpayers who have less than a month to complete their self assessment tax returns by 31 January, with risks of tough penalties for anyone who has breached the high income child benefit charge (HICBC) £50k limit

More than 11m 2018-19 tax returns are due back with HMRC by the end of January, with around 54% of taxpayers that have already filed their returns.

The majority of returns filed were completed online (more than 5.6m), online submissions accounted for a total of 89% of tax returns filed so far.

There were 34,488 taxpayers who filed their returns on New Year's Eve, just in time to celebrate 2020. Whereas some people felt like leaving it until next year, as 17,080 returns were submited on New Year's Day.

People need to complete a tax return if they, or their partner, have received child benefit and either of them had an annual income of more than £50,000.

A family with two children can claim nearly £1,800 a year in child benefit, £20.70 for your first chid and £13.70 for any further children per week.  

In 2018 HMRC was forced to review thousands of cases where a ‘failure to notify’ penalty was issued for the tax years 2013-14, 2014-15, and 2015-16, to taxpayers who had not registered for the high income child benefit charge (HICBC). It also reassessed its interpretation of what constituted a ‘reasonable excuse’.

It looked at 35,000 cases and cancelled the penalties of over 6,000 taxpayers who had a reasonable excuse for not notifying their liability for those tax years with parents receiving an average refund of £370.

This resulted in HMRC refunding £1.8m in child benefit tax penalties in 2019.

The refunds were sent to families that claimed child benefit before HICBC was introduced, and where one partner’s income subsequently increased to over £50,000, and to families where the liability to HICBC arose in the 2013-14, 2014-15, or 2015-16 tax years as a result of the formation of a new partnership.

To explain in more detail, taxpayers would also have to complete a return if they have received more than £2,500 in other untaxed income, for example:

  • from tips or commission;
  • money from renting out a property;
  • income from Savings, investments & dividends;
  • from foreign income;
  • are self-employed sole traders and earned more than a £1,000;
  • are a partner in a business partnership;
  • are employees claiming expenses in excess of £2,500; and
  • have an annual income over £100,000.

If taxpayers have completed a self assessment tax return last year but did not have any tax to pay, they still need to complete a 2018-19 tax return unless HMRC has written to them to say it is not required.

For any taxpayers who are yet to start their self assessment, HMRC has films and webinars that can help with each stage of the process, with bespoke guidance for individuals’ varying circumstances, including a video for people completing a tax return for the first time.

The penalties for late tax returns are:

  • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
  • after three months, additional daily penalties of £10 per day may be charged, up to a maximum of £900;
  • after six months, a further penalty of 5% of the tax due or £300, whichever is greater; and
  • after 12 months, another 5% or £300 charge, whichever is greater.

There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, six months and 12 months. Interest will be charged on all late payments.

Angela MacDonald, HMRC’s director general for customer services, said: ‘People have just under a month left to file their tax returns online to avoid any unnecessary penalties. Any tax due is also payable by 31 January.

‘We know that can be a worry, and not only when large sums are involved, so I would urge anyone who is expecting to find it difficult to pay their tax to get in touch with us as soon as possible. We will do everything we can to help and provide practical support.’

Help with submitting a tax return is also available on GOV.UK or from the self assessment helpline on 0300 200 3310 and on social media.

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