Warning to all taxpayers – Pay your taxes on time amidst rising interest rates

As the deadline for paying any tax approaches, it is crucial you make your payments accurately and on time before it is too late.

If you do not pay your tax obligations by 31 January 2024, HM Revenue & Customs (HMRC) will charge you interest on any unpaid tax.

The tax authority’s interest rates have hit their highest rate for more than 20 years, and you need to understand how this will affect you and your tax obligations.

The interest rate, for unpaid tax, has increased to 7.75 per cent. HMRC’s interest rate does change and is calculated as the Bank of England base rate, plus 2.5 per cent.

Along with high interest rates, you need to be aware of the financial penalties that you might face if you make a late payment.

With the interest rate rising significantly, you need to know whether you can financially afford to pay these penalties if you file your tax return late.

What happens if my tax payments are late?

Filing a return after midnight on 31 January will result in a £100 penalty.

After three months, a penalty of £10 a day will be introduced until the payment is made.

The maximum this penalty can rise to is £900.

If your tax is outstanding after six months, the penalty will be charged at a rate of £300, or five per cent of your overall tax liability if it is higher.

Any tax returns over 12 months late will be charged an extra £300 or five per cent of the overall tax liability if greater.

How can I avoid the penalties?

Overall, you should ensure you pay your tax on time and as accurately as possible.

If you cannot do this or are worried about the additional charges you might incur, it is recommended you make an estimated payment to avoid these penalties.

Whilst an estimated payment allows you to avoid financial penalties, you need to remember your payment might not be correct at the time which is something you need to check.

There are also some excuses HMRC will consider to be reasonable if you file late.

These include:

  • A relative passing away close to the deadline
  • If you were in hospital or had a life-threatening illness
  • Your computer, or any other device used to submit your tax return, broke
  • HMRC services were down.

Any amendments to a tax return can be made to a tax return up to 12 months from 31 January 2024, however interest will be charged if you underpaid.

Amending your return can be done if you:

  • Realise you have missed a relief which you were entitled to such as relief for Gift Aid contributions.

Missing tax relief means you might be entitled to a tax refund.

If you would like advice on how to make your tax payments on time, and avoid penalties, contact us today.

Blog right caret

Adapting your business plan for the summer

Blog

Tax implications to consider for business owners when paying themselves 

Blog

Research and Development tax relief changes 

Blog

Business right caret

Small business confidence dips ahead of new customs controls coming into force

Four in 10 exporters have reported a fall in international sales since the end of the Brexit transition period, a major study has revealed. According to the tracker, four in 10 – around 41 per cent of traders – have reported a “drop off” in international sales in the three months to September 2021.

Business

Large number of businesses looking to recruit more staff

It is perhaps a sign of confidence returning to the UK economy that a significant number of British businesses believe they will be recruiting staff over the coming year.

Business

Spring Statement 2022 summary

Mr Sunak found himself addressing MPs against a background of crisis, with the residual impact of COVID, the invasion of Ukraine and the cost-of-living crisis all affecting the economy in different ways.

Business

Cloud right caret

Cloud-powered accounting: Advancing beyond traditional cloud accounting systems

Cloud

Cloud accounting isn’t right for my business! We disagree.

Cloud

Making MTD for ITSA easier for landlords

Cloud

Compliance right caret

HMRC asks sole traders to correctly report SEISS grants or “repay in full”

Sole traders who have not correctly reported their Self Employment Income Support Scheme (SEISS) grants may be forced to repay them in full, it has been warned.

Compliance

Making Tax Digital – what you need to know ahead of 2022-23

From April 2022 all VAT-registered businesses need to comply with MTD for VAT. MTD applies to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000

Compliance

Real-time online sanctions tracker to assist importers and exporters

Any business involved in international trade, whether importing, exporting or part of the supply chain supply to those firms, is faced with a rapidly changing regulatory environment.

Compliance

Economy right caret

Small businesses call for Government support to tackle climate change

According to new research, many are addressing energy usage, increasing recycling and investing in microgeneration, but only a third of those have a formal plan to tackle climate change within their business.

Economy

Hospitality bosses develop new strategies to cope with staff shortages

Hospitality business owners have responded positively to the staff shortages caused by the pandemic, by increasing wages and implementing improved staff retention strategies.

Economy

Everything you need to know about the new WTO Services Domestic Regulation

New World Trade Organisation (WTO) rules are set to cut the cost of global trade by billions of pounds every year, it has been announced.

Economy

Funding right caret

Funding for growing businesses – Obtaining and managing private investment

Funding

Investment right caret

Funding for growing businesses – Obtaining and managing private investment

Investment

MTD right caret

Making MTD for ITSA easier for landlords

MTD

SME right caret

Adapting your business plan for the summer

SME

Research and Development tax relief changes 

SME

Late payments – why they are so damaging to small businesses and how to deal with them

SME

Tax right caret

Understanding tax obligations for charities

Tax

Navigating estate planning and Inheritance Tax: what you need to know

Tax

Tax considerations for small business owners: Sole traders vs limited companies 

Tax

Tax Planning right caret

Almost 800,000 tax scams reported to HMRC in past 12 months, figures reveal

Nearly 800,000 tax-related scams were reported to HM Revenue & Customs (HMRC) in the past 12 months, a major study has revealed. According to the report, HMRC responded to 797,010 referrals of suspicious contact from the public in the last year. Around 358,000 of these involved scams where taxpayers were offered bogus tax rebates.

Tax Planning

Be aware of tax liabilities if you are using cryptocurrencies

For those who have dabbled in the market, its important for them to understand that there may be tax liabilities with Captial Gains Tax and Income Tax, with any transactions whether with currency or other crypto assets.

Tax Planning

Did you use a Bounce Back Loan to cover personal expenses during the pandemic? Act now to avoid tax consequences

If you received a Bounce Back Loan (BBL) during the coronavirus pandemic and took the cash as drawings, there may be additional tax consequences.

Tax Planning

VAT right caret

Paper VAT registration to be abolished in latest digital move

In the latest move in their Making Tax Digital (MTD) campaign, HM Revenue & Customs (HMRC) is removing paper VAT registration from 13 November 2023.

VAT

I’m not VAT registered; can I claim VAT back? 

VAT