- Record-breaking 11.5 million taxpayers submitted self-assessment tax returns by last night’s deadline, according to figures released by HMRC
- 778,068 filed on 31 January, including almost 33,000 taxpayers who filed in the final hour before the deadline
- An estimated 1.1 million failed to file in time, according to HMRC, and could incur penalties and interest
AJ Bell pensions and savings expert, Charlene Young, comments:
“A record number of taxpayers filed a self assessment return, with rising interest rates, reduced allowances and frozen tax thresholds combining to force more people than ever before into the tax return trap.
“Higher interest rates and an unchanged tax-free Personal Savings Allowance will have forced more people into declaring tax owed on savings interest compared to last year.
“More people will also have to pay a child benefit ‘high income’ charge, where they repay some or all of the child benefit they received, as the income threshold for this hasn’t budged from the £50,000-£60,000 taper that was introduced in 2013.
“Whilst tax on interest and the child benefit tax charge can sometimes be reclaimed through people’s tax codes, many will have had to file self-assessment tax returns.
“Anyone who earnt over £100,000 for the year should have filed, with rising wages pushing people over another frozen earnings threshold, although this will change next year when the earnings trigger rises to £150,000.”
Cuts to allowances to catch more taxpayers
“Further reductions in tax free allowances threaten to capture even more Brits in the tax return web this time next year.
“The dividend allowance is £1,000 for the current tax year 2023-24 and will be halved again to £500 from 6 April. The CGT allowance faces a similar fate – already cut from £12,300 to £6,000 this year, it will be slashed again to £3,000 from 6 April 2024.
“According to figures released by HMRC under a Freedom of Information request made by AJ Bell, the Revenue estimates an extra 1.8 million people will be pushed into paying dividend tax by the end of the next tax year (compared with 2022/23), with 260,000 individuals and trusts set to pay capital gains tax for the first time as well over the next two years.”
The missing 1.1 million
“HMRC estimates over a million people failed to file by the deadline. Many simply won’t realise they need to file an assessment, while others may have failed to get their paperwork in order to meet the deadline.
“They’ll be slapped with a £100 penalty for not filing, along with daily interest from today at an annual rate of 7.75% on anything they owe – that’s the highest level of interest charged by the taxman since 2008. Any tax for 2022/23 still left unpaid by March could suffer an extra 5% penalty charge. These percentage charges apply to unpaid tax due last year, not payments on account due for the coming year.
“If you’re one of these people, get in touch with HMRC as soon as possible. If you’ve got a reasonable excuse you might be able to appeal any penalties, and even if you can’t appeal, you might be able to set up a payment plan with HMRC to get back on track.
“For those thinking ahead for 2023-24, if you’re up to date with HMRC you can apply for a budgeting plan to help pay regularly towards your 2023-24 bill, or if you make payments on account you can request to reduce them if your earnings are likely to be significantly lower than before.”
