HMRC is to expect a windfall of £87million after one in 13 taxpayers did not file their self assessment tax returns by the deadline at the end of January. It is estimated that 870,000 taxpayers will face an automatic fine of £100 for missing the deadline, whilst over 10 million managed to do theirs by the deadline of midnight on the 31st January.
HMRC Self Assessment
HMRC said that 89% of the people who were required to complete a self assessment tax return chose to complete it online. This meant that they had an extra three months to get their affairs in order and file their return, an increase of 85% from the last year. A representative from the Institute of Chartered Accountants said that the increase in online tax returns was ‘fantastic’ for HMRC. However, he said that HMRC would struggle to get the figure above 95 per cent as there is a ‘small percentage’ of taxpayers who don’t know how to file online or are unable to afford professional help.
The HMRC Director for Personal Tax said that the new online tools had proven to be popular, with over 300,000 people using a webchat facility in the last two weeks of January. She said that HMRC is dedicated to making the self assessment tax return process ‘easier and more intuitive’ every year. Last year, the UK Government pledged to replace annual self assessments with digital tax accounts, to give taxpayers a perspective of their affairs at any point in the year. By 2020, it hopes to have moved HMRC fully online, therefore eliminating the need for annual returns.
Currently, taxpayers have to file a self assessment if they earn money outside of a regular salary, where tax is deducted using a PAYE scheme. Property landlords and people with a one off income, along with the self employed will have to file a tax return.
Critics have said that if HMRC is determined to take the self assessment process online, they must support the vulnerable and elderly. Over 110,000 taxpayers recently called for a debate in parliament by signing a petition calling for plans for quarterly tax reports to be stopped. The proposals were part of HMRC’s digital first initiative and meant that self employed people, as well as landlords who earn more than £10,000 a year would have to report their tax affairs quarterly rather than annually. The financial secretary to the Treasury said that quarterly reports would be ‘far less of a burden’ but there are still concerns that it could drive up administrative costs, putting pressure on the flow of cash from taxpayers.
To find out more about processing a self assessment tax return, see our guide.
To speak to HMRC about the process, call the HMRC contact number.