HMRC’s Latest Figures Reveal 1.1 Million Missed 31 January Self Assessment Deadline: What Happens Next?

The deadline for submitting Self Assessment tax returns may have passed, but the latest statistics from HMRC have brought to light some alarming figures for those who failed to meet the 31 January deadline.

According to HMRC's latest data, 1.1 million taxpayers missed the cut-off for filing their 2023/24 tax returns.

Despite an expected 12 million tax returns, only 10.9 million were filed by the deadline, which excludes voluntary returns and late registrations. This represents a significant shortfall, leaving a substantial number of individuals and businesses with penalties or other consequences to contend with.

The missed deadline means that around 1.1 million taxpayers are at risk of receiving fines, late fees, or other penalties.

This annual deadline is crucial for many self-employed individuals, freelancers and small businesses, who need to submit their tax returns to ensure compliance with the UK tax system.

So, what happens to those who missed the deadline? And are there any solutions to help those struggling to pay their tax bill?

The Consequences of Missing the Deadline

For those who missed the 31 January deadline, HMRC imposes automatic penalties. As of the 2023/24 tax year, the penalty system is as follows:

• Initial penalty: A £100 fine is imposed immediately after the deadline passes, even if no tax is owed.
• Additional daily fines: If the tax return is still not filed after three months (i.e., by 1 May), an additional daily fine of £10 is applied, up to a maximum of £900.
• Further penalties for six months: If the return remains outstanding after six months, HMRC will apply a penalty of 5% of the tax due or £300 (whichever is greater).
• Further penalties after one year: If the return is still not submitted a year after the deadline, the fine can increase further, depending on the outstanding tax amount.

These fines and penalties can quickly add up, putting more financial pressure on the taxpayer. However, it’s important to note that penalties can be avoided or reduced if there are valid reasons for missing the deadline, such as illness or exceptional circumstances.

Taxpayers who find themselves in such situations should contact HMRC as soon as possible to explain their situation and see if they are eligible for any exemptions or leniency.

Why Do People Miss the Deadline?

Several factors contribute to the high number of late tax returns. These can include:

1. Financial difficulty: Many taxpayers, especially those who are self-employed or running small businesses, may be struggling with cash flow and unable to complete their tax return or pay their bill on time. Economic pressures, such as reduced income or delayed payments from clients, can make it harder to manage tax obligations.
2. Complexity of the tax return process: The Self Assessment tax return process can be confusing, particularly for those who are not familiar with accounting and tax procedures. Small businesses and self-employed individuals may feel overwhelmed by the paperwork and the need to understand various tax reliefs and allowances available to them.
3. Last-minute filing: Procrastination is a common problem, with many taxpayers putting off their tax return until the last minute. Some believe they can easily complete it before the deadline, only to find themselves rushing at the final hour.
4. Technical issues: Although the online system is generally reliable, some people may encounter technical difficulties while filing their return on the HMRC portal, leading to delays.

Help for Those Who Struggle to Pay

While penalties can be a significant burden, it’s important for taxpayers to know that there are options available to help them meet their financial obligations. For individuals and businesses facing challenges paying their tax bill, income tax loans and payment plans can provide some relief.

Income Tax Loans for Businesses and Individuals

Income tax loans are a viable option for businesses and self-employed individuals who find themselves unable to pay their tax bill upfront. These loans allow the taxpayer to borrow the necessary funds to pay their tax debt and then repay the loan over time. This can be particularly useful for those who need additional time to manage their cash flow or are experiencing temporary financial setbacks.

Many lenders in the UK offer these types of loans, and they are generally flexible in terms of repayment schedules.

Interest rates can vary, but many loans come with relatively competitive rates for people with good credit scores. Some key features of income tax loans include:

1. Quick access to funds: If you find yourself unable to pay your bill on time, an income tax loan can offer immediate access to the money you need to meet your deadline and avoid penalties.
2. Flexible repayment options: These loans can be tailored to your financial situation, with repayment periods that range from a few months to several years. This flexibility can make managing your finances easier if you’re experiencing a temporary cash flow issue.
3. Minimising late fees and penalties: By taking out a business loan to pay your tax bill on time, you can avoid the escalating penalties that come with missing the deadline. This can save you money in the long run.

HMRC Payment Plans

Another option for businesses and individuals who are struggling to pay their tax bill is to set up a Time to Pay Arrangement (TTP) with HMRC. This allows taxpayers to pay their bill in instalments rather than in one lump sum. Payment plans are available for self-assessment tax bills, VAT, PAYE, and other taxes.

The main benefit of a TTP is that it provides a more manageable way to pay off tax debts over time. However, to be eligible for a Time to Pay Arrangement, you need to meet certain criteria, such as having a good compliance history and demonstrating that you can afford the monthly instalments.

Final Thoughts

With the latest figures revealing that 1.1 million taxpayers missed the 31 January Self Assessment deadline, it’s clear that many people are still struggling to meet their tax obligations. However, it's important for taxpayers to be aware of the options available to avoid penalties, including applying for income tax loans or negotiating a Time to Pay Arrangement with HMRC.

If you’ve missed the deadline or are struggling to pay your tax bill, it’s essential to act quickly and explore your options. The longer you wait, the more likely you are to face escalating penalties, so it’s always better to seek assistance sooner rather than later. By taking proactive steps, you can avoid the consequences of a missed deadline and get back on track with your tax obligations.