Taxpayers who complete self-assessment returns have been alerted to the possibility of facing steep charges if they fail to pay their dues by the end of the July deadline. With over 12 million people filing self-assessment tax returns annually, there are two instalments for payment. The first instalment, known as the payment on account, is due by the end of January. However, there is a second deadline on July 31st. If this bill is not paid on time, individuals will incur late payment interest rate charges, which are expected to increase. The current rate stands at 7% of the owed amount, 2.5 percentage points above the Bank of England base rate. However, with interest rates projected to rise in order to curb inflation, financial markets predict that the base rate could reach 6% by year-end, resulting in late payment interest charges of 8.5%.
As the cost-of-living crisis persists and summer holidays eat into people’s savings, concerns arise that many taxpayers will struggle to meet this deadline. Sarah Coles, head of personal finance at wealth manager Hargreaves Lansdown, warns of the possibility of forgetting to pay the bill due to the busy summer season: “The deadline for payment on account is lurking. It hits at such a busy time of year – when families are up to their ears in summer plans – so there is a huge risk you could lose track and forget to pay.”
In addition to the risk of late payment charges, new statistics from tax specialist Thomson Reuters reveal that over 18,000 penalties were issued by Revenue & Customs last year due to careless errors made on tax returns. Furthermore, approximately two million people submitted their returns after the January 31st deadline and were automatically subjected to a £100 fine, in addition to interest charges on the amount owed. Neglecting to file tax returns also leads to further penalties, including a £10-a-day fine for up to 90 days, additional fines after six months, and continued penalties after 12 months of non-compliance.
The penalties imposed by Revenue & Customs for ‘careless errors’ ranged from minor warnings with no financial charge to fines up to 30% of the unpaid tax. Separately, 10,700 taxpayers were fined between 20% and 70% of the owed tax amount for ‘deliberate errors,’ such as attempting to conceal payments. Simon Brookings, manager of tax and accounting at Thomson Reuters, emphasizes the importance of accuracy in tax returns and the value of expert accountancy advice: “All these penalties levied show how important it is to ensure tax returns are accurate – and how accountancy advice is often vital. The taxman may be lenient on the first mistake but repeat offences are a red flag of trying to pull the wool over their eyes.”
Incurring interest charges by failing to pay tax owed by the July deadline not only has financial consequences but also draws attention to the individuals involved. To avoid future deadline issues, individuals who couldn’t pay by the July deadline can set up automatic payments through a ‘time to pay’ arrangement with Revenue & Customs. This arrangement allows for spreading the owed tax amount over 12 monthly instalments, with a maximum limit of £30,000.
Note: Some links in this article may be affiliate links. If you click on them, we may earn a small commission. This helps us fund This Is Money and maintain its free accessibility. Our editorial independence is not influenced by any commercial relationships.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
