Warning over £10 a DAY penalty starting in weeks for thousands – including anyone selling online
THOUSANDS of households are being warned that they could be stung by a £10 a day penalty starting in weeks.
Those who have still not completed their 2022/23 self-assessment tax return are set to be smacked with a daily £10 fine for each day it remains unsubmitted.
The penalty will be added from May 1 for a period of 90 days, meaning you could end up with a whopping bill of £900.
After this, further penalties will apply either 5% of the 2022/23 tax due or £200 – whichever is higher.
An estimated 1.1million customers missed the deadline, according to HMRC.
Tax is usually deducted from wages and pensions via PAYE but self-employed workers and businesses have to actively pay it to HMRC.
But those selling their second-hand goods on apps may not not realise that they need to submit a self-assessment return too.
This is because anyone selling items online might be liable to pay tax if they earn £1,000 or more.
If the money a member makes on online marketplaces over a year is less than the amount they paid for the items they are selling, then there is no tax to pay.
But those “trading” for profit might need to pay tax.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The good news is that if you’re just selling things you no longer use, there’s no tax to pay.
“It’s only if you bought items in order to resell them for a profit – or you made something yourself to sell – that you’re considered to be trading.
“If you’re trading, you have an allowance of £1,000 a year before you have to worry about tax.
“This is designed to save the hassle if you have a small side hustle or a hobby you make money from.”
How do you know if you need to submit a tax return?
Self-assessment is a system HMRC uses to collect income tax.
Tax is usually deducted automatically from wages, pensions and savings, but people and businesses with other incomes must report it in a tax return.
This applies to the following:
- Your income from self-employment was more than £1,000
- Earned more than £2,500 from renting out property
- You or your partner received high-income child benefits, and either of you had an annual income of more than £50,000
- Received more than £2,500 in other untaxed income, for example, from tips or commission
- Are limited company directors
- Are shareholders
- Are employees claiming expenses over £2,500
- Have an annual income over £100,000
How do I submit a tax return?
Before you can complete and submit your tax return, you must have a so-called unique taxpayer reference (UTR) and activation code from HMRC.
This can take a while to receive, so if it’s the first time you’re completing a self-assessment, register online immediately and ask HMRC for advice.
To sign in or register, visit the “Self Assessment tax return” section of HMRC’s website.
If you’ve already signed up for self-assessment, you can find your UTR in relevant letters and emails from HMRC.
HMRC accepts your payment on the date you make it, not when it reaches its account – including on weekends.
The deadline for filing your self-assessment tax return by post is October 31.
If you miss the deadline by up to three months, you will be charged a £100 penalty.
If you miss the deadline by over three months, you will be charged more.
But don’t worry. You can complete your tax return online if you don’t send your paper form on time.
The deadline for this was January 31, 2024.
If you need to change your tax return after filing it, you can do so within 12 months of the original deadline or write to HMRC for any changes after that.
Filling in your tax return can seem daunting, but with our step-by-step guide, you’ll have it sorted quickly.
How much can I be fined for filing my taxes late?
Late filing fees are pretty steep.
According to HMRC, you’ll get a £100 fine for failing to file your return a day after the deadline.
Then, a £10 daily fine applies every day you don’t submit your tax return.
This is capped at 90 days – or £900.
So, on top of the initial £100 fee, a £1,000 maximum late filing fine applies.
If you’re six months late, there’s a further £300 fine or 5% of the money you owe – whichever is higher.
That’s on top of the daily £10 charges built up so far, so there’s no shortcut to a smaller payment once you’re late.
And after 12 months, another £300 or 5% fine applies.
Interest is also added on top of this.
If you deliberately haven’t filed your tax return, a fine of up to 100% of the tax due could also be sent.
How do I file a tax return?
TO file a self assessment tax retun, you'll need to register with HMRC first, which will then issue you with a Unique Taxpayer Reference (UTR).
You must register for self assessment by October 5 if you have to file a tax return and you have not sent one before.
You can do so by visiting www.gov.uk/register-for-self-assessment.
If you’ve previously registered and already have a UTR, you don’t need to go through this step again.
Once you’ve got your UTR, you can sign in via the “Self Assessment tax return” section of HMRC’s website by visiting www.gov.uk/log-in-file-self-assessment-tax-return.
You can then file your self assessment tax return online.
The deadline for sending a return online is January 31 every year.
If you need a paper copy of the main Self Assessment tax return, call HMRC on 03000 200 3610 and request an SA100 form.
The deadline for sending a return using a paper form is October 31 every year.
You need to pay the tax you owe by midnight on January 31 each year.
HMRC accepts your payment on the date you make it, not the date it reaches its account.
File late and HMRC will issue you with a fine.
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