‘Start the process now’: Freelancers have less than a month to avoid £900 tax return fines

HMRC provide advice on self-employed tax returns

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

HMRC must receive Self Assessment tax returns and any money owed to the Government by certain deadlines. This affects self-employed workers specifically who have been warned to act quickly in the face of ongoing coronavirus concerns.

What is due at the next deadline?

Those who submit paper based tax returns have until October 31 to do so and money.co.uk noted it is “important to start the process now”. This is because even though it may seem like there is plenty of time, gathering all of the relevant documents can be a slow process, especially for those who faced disruption to their work thanks to coronavirus.

This is important to note as anyone who misses the deadline of October 31 faces a minimum fine of £100.

James Andrews, senior personal finance expert at money.co.uk, commented: “We all know that one of the main drawbacks of being self-employed, quite apart from fluctuating income month to month and year to year, is being forced to report your income and pay tax to HMRC.

“Anyone submitting their tax return online has until the new year, however, if you want to submit a paper tax return then the self assessment deadline is October 31, meaning you must start the process now to make sure you don’t hit a delay.”

Fortunately, Mr Andrews went on to provide guidance on exactly what people should do to ensure they don’t fall afoul of HMRC.

What do you need to do?

Mr Andrews continued: “Firstly, download and print out the 2021 SA100 tax return form from the Government website here. To complete it, you’ll need to gather all the relevant paperwork and documents, which can include your P60, P45, P11D or a P9D. You might also need to provide a summary of any rental income and expenses or statements of earnings from savings and investment.

“You can send what you owe to HMRC by bank transfer, cheque through the post or in your bank by using a slip that HMRC will provide. If you want to spread your payments over time, you can use a budget payment plan, which you can find out more about on the Government website here. Remember that you can no longer pay your tax bill by credit card.

“Once you have filled out your form and arranged payment, return it to the HMRC self assessment centre before the deadline on October 31.

“If you miss the deadline for submitting your self assessment tax return or paying your bill, you will be charged a penalty of £100. If it is more than three months late, you could be charged an extra £10 a day up to a maximum of £900.”

State pension age change may impact bus pass & prescriptions [INSIGHT]
Government to scrap free NHS prescriptions for over 60s – You MUST act [WARNING]
‘Hidden tax’ could erode your ‘comfortable retirement’ – what to do

High incidences of failure

This guidance should be heeded carefully as recent analysis showed freelancers are struggling to get on top of the basics. Yesterday was the deadline for people to register for self assessment if they received income above the trading allowance and that income wasn’t taxed at source (ie through an employer). It covered people who are self-employed and others such as those who rent out property.

However, untied, the personal tax app, warned it identified in its users’ experience many applications to register with HMRC do not succeed. Typically, it said, taxpayers are advised submitted data does not match HMRC records, and specifically that the address has not matched.

As such, untied called on HMRC to investigate the reasons for this and to offer reassurance to taxpayers.

Kevin Sefton, CEO of untied, commented: “At points we have seen more than 50 percent of applications fail. We have examples of data being submitted which is a direct match for the records in that individual’s HMRC account – and it is still rejected.

“These people are trying to comply with their tax obligations. And yet HMRC’s systems are giving them errors which we cannot explain. We are keen to engage with HMRC to help taxpayers register without the extra anxiety of their applications being rejected.

“We are calling for reassurance from HMRC that there will be no late registration penalties for those people affected. In addition to this, we also would like confirmation that if registration cannot be completed in time, that they won’t be penalised for late submission of their 2020/21 returns which are due on January 31, 2022.

“For freelancers the consequences of the pandemic will be felt for years to come”

Tax returns may only add to some self-employed workers’ worries. In recent days, the Government ended a number of coronavirus-related support measures and according to analysis from the Association of Independent Professionals and the Self-Employed (IPSE), this will plague the self-employed for some time.

IPSE warned as the SEISS and furlough schemes came to an end, there is still a “debt crisis” among freelancers who were excluded from support. Research from the organisation showed two out of three freelancers’ businesses (67 percent) were negatively affected by the pandemic and that almost half (47 percent) saw a decrease of over 40 percent in turnover.

However, there were significant gaps in support for the sector, leading to almost one in four freelancers (23 percent) taking on credit card debt to get by. IPSE also showed one in seven (14 percent) used their overdrafts to get by, while more than a quarter (27 percent) used up all their savings during the pandemic.

Andy Chamberlain, Director of Policy at IPSE, commented: “While the Self-Employment Income Support Scheme (SEISS) has been a vital lifeline for many self-employed people, it cannot be ignored that many others were unable to access it.

“There were approximately 1.5 million newly self-employed people, limited company directors and others who were excluded. (The total including other worker groups may run up to over three million.)

“These excluded groups have now been driven into a debt crisis and we urge the Government to look at the situation and consider debt relief measures to get these freelancers back on their feet. SEISS may be ending, but the financial consequences of the pandemic – and of the exclusion of so many freelancers from support – will be felt for years to come.

“We also urge the Government to plan now for better support if there are renewed restrictions this winter. The exclusion debacle was a disaster for millions of freelancers and others across the country: this must not happen again.”

Thus far, the Government has refused to extend its support measures but additional funding will be coming over the winter months. In late September, Rishi Sunak announced plans to launch a new £500million support fund to help those “most in need” cover rising winter costs.

Source: Read Full Article