How to Minimise Personal Tax Penalties

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You’ve missed the 31st January tax deadline and don’t know what to do next? Below is our guide on how you can minimise your personal tax return penalties.

1. Was a personal tax return actually required to be completed?

   Assuming there is no tax due, and all tax has been deducted at source (i.e PAYE), can the tax return filing demand be withdrawn. In some circumstances HMRC will agree to remove the need to file the tax return. As a result, any penalties issued will also be withdrawn.

2. File the tax return within the next 3 months

   Late filing penalties of £100 arise for being 1 day late. However, the late filing penalty remains at £100 up to 3 months late. It is important to use this window of 3 months wisely and ensure that the tax return is filed within this period. Failure to do so will be costly as after 3 months the late filing penalty increases to £10 a day.

3. File a provisional tax return

   In some circumstances it may be possible to file a provisional tax return which can be amended at a later date. The late filing penalty, will under certain conditions be based on the filing date of the provisional return.

4. Make a payment on account to HMRC

   Late payment penalties arise on any unpaid tax liabilities. Therefore, our recommendation is to make a payment on account. Don’t wait for the tax return to be completed. Instead just make an estimate of your tax liability and pay this to HMRC. How to pay your Personal Tax liability.

5. Phone HMRC and arrange a time to pay

   Late payment penalties don’t apply if a time to pay arrangement is agreed in advance with HMRC. Should you be struggling to pay your personal tax due, phone HMRC on these contact details at the earliest opportunity.