As the 31 January 2025 deadline for self-assessment tax returns approaches, individuals and businesses alike are scrambling to get their finances in order. Missing this crucial deadline could lead to unnecessary penalties, stress, and even legal complications. At Accounting People, we’re here to help you navigate the process smoothly and avoid any last-minute panic.
In this blog, we’ll outline everything you need to know about self-assessment tax returns, common mistakes to avoid, and why timely filing is essential for your financial well-being.
What Is a Self-Assessment Tax Return in the UK?
A self-assessment tax return is a legal obligation for individuals and businesses in the UK who earn income outside of PAYE (Pay As You Earn). This includes self-employed professionals, landlords, company directors, shareholder, and those earning additional income through investments or savings. Filing your tax return ensures you pay the correct amount of tax owed to HMRC.
Who Needs to File a Self-Assessment Tax Return?
You may need to complete a self-assessment if you:
- Are self-employed or a sole trader.
- Earn income from rental properties.
- Receive untaxed income such as dividends or investments.
- Earn over £100,000 in annual income.
- Are a director or shareholder of a limited company.
- Claim child benefit but your income exceeds £50,000.
Key HMRC Deadlines for Self-Assessment Tax Returns 2025
Missing key deadlines can lead to penalties and interest charges. Here are the important dates to keep in mind:
- 5 October 2024: Deadline to register for self-assessment if you’re filing for the first time.
- 31 October 2024: Deadline for paper tax returns.
- 31 January 2025: Deadline for online submissions and payment of any tax owed for the 2023/24 tax year.
- 1 February 2025: Interest starts accruing on unpaid tax.
Pro Tip: Filing early gives you more time to prepare and avoids the risk of last-minute errors.
Tax Penalties for Late Self-Assessment Tax Returns in the UK
Failing to file your tax return by the deadline can result in severe penalties:
- Initial Penalty: £100 for missing the 31 January deadline.
- Daily Fines: £10 per day after three months, up to a maximum of £900.
- Further Penalties: 5% of unpaid tax after six months, plus an additional 5% after 12 months.
- Interest Charges: Interest accrues daily on any unpaid tax.
Late filing can also trigger an investigation by HMRC, which could disrupt your business operations and finances.
Steps to File Your Self-Assessment Tax Return
Filing your tax return doesn’t have to be overwhelming. Follow these simple steps:
1. Gather All Necessary Documents
Ensure you have the following:
- P60 or P45 (if employed).
- Invoices and receipts for self-employed income.
- Rental income records and allowable expenses.
- Dividend vouchers and investment statements.
- Pension contributions and charitable donations.
- Bank statements for interest earned.
2. Register with HMRC
If you’re filing for the first time, register online with HMRC to receive your Unique Taxpayer Reference (UTR). Note that this process can take up to 10 days.
3. Use the Right Platform
File your return through HMRC’s online portal or use approved accounting software. Accounting People offers expert assistance to ensure your submission is error-free.
4. Double-Check Your Information
Review your entries carefully to avoid mistakes such as:
- Incorrect income figures.
- Claiming ineligible expenses.
- Forgetting to include additional income.
5. Pay Your Tax Bill
Calculate and pay the tax owed by 31 January 2025 to avoid penalties. You can pay via bank transfer, debit card, or direct debit.
Common Self-Assessment Tax Return Mistakes to Avoid
Even seasoned taxpayers can make errors. Here are some pitfalls to steer clear of:
- Missing Deadlines: Avoid penalties by filing and paying on time.
- Incorrect Expense Claims: Ensure all claimed expenses are legitimate and business-related.
- Forgetting to Report Income: Include all sources of income, including side hustles or foreign income.
- Rushing the Process: Filing in a hurry increases the risk of errors.
- Not Keeping Records: Retain financial documents for at least six years.
Why Filing Your Self-Assessment Tax Return Early Matter
Filing your tax return well ahead of the deadline has numerous advantages:
- Reduced Stress: Avoid last-minute panic and potential errors.
- Faster Refunds: If HMRC owes you money, you’ll receive your refund sooner.
- More Time to Budget: Knowing your tax liability early gives you time to plan your finances.
- Access to Expert Help: Accountants and advisors have more availability to assist you.
Why Choose Accounting People for Your Self-Assessment?
At Accounting People, we understand the complexities of self-assessment and are here to simplify the process for you. Here’s why we’re the ideal partner for your tax needs:
- Expertise You Can Trust: With years of experience, we ensure your tax return is accurate and compliant.
- Personalised Service: We tailor our advice to suit your unique financial situation.
- Time-Saving Solutions: Let us handle the paperwork so you can focus on growing your business.
Advanced Tools: We use cutting-edge software to streamline the filing process.