Last minute Britain: over 2.1 million Britons are scrambling to file their tax returns by the end of January

It is human nature to leave tasks until the last minute, especially those which are perceived as difficult or boring, such as filling in forms.

With the start of the New Year, attention tends to turn to the end of the tax year, where savers and investors realise they have limited time left to make the most of their various tax allowances before the 5 April deadline. But for over 2.1 million people there is a much more pressing deadline which should be their immediate priority: submitting their self-assessment tax return for the 2017/18 financial year.

The final date for filing self-assessment tax returns for the 2017/18 tax year is midnight on 31st January, which can now only be done online as the deadline for submitting paper returns expired at midnight on 31 December. Failure to do these by even one day will result in a £100 fine, which rises by £10 a day to a maximum of £900 by 1 May and continues to ratchet up further thereafter.

Following a Freedom of Information request from investment and financing planning group Tilney, HM Revenue & Customs have disclosed that, of the 8.212 million self-assessment returns submitted for the 2016/17 tax year by the end of January deadline, over 2.1 million – 25% of the total - were filed in the four weeks following 31 December.

Commenting on the findings, Jason Hollands, managing director Tilney, says: “It is all too easy to put off things that most of is regard as tedious until the eleventh hour, but leaving your tax return to the very last minute can be both stressful and risky.

“It can be stressful because filing a return can involve quite a bit of preparation and not everyone is great at orderly record keeping. They may need to track down their taxpayer reference, payslips and annual P60 statement, check bank accounts for interest and dig out details of any share dividends and tax credits received. Any personal pension contributions will also need to be entered and details of possible capital gains crystallised on the disposal of shares or other assets calculated. Importantly, to file online, the only option left now, you need an HMRC account and if you do not have one – or have lost details - you will need to be sent an activation code in the post, so it is important to act as soon as possible to avoid a late filing penalty.

“Importantly, any additional tax due will be eligible for payment by 31 January, so leaving your return until late in the day might mean you could be hit with an unexpected and possibly sizeable demand with no time to raise the necessary cash which may be in shortly supply after the Christmas credit card bills have arrived. There are of course unwelcome penalties for late payment, with a 5% charge on the tax owed for late payment after 30 days as well interest charged at a rate of 3%. Those owing less than £3,000 could have avoided the need to make a lump sum payment altogether and settled the tax owed through PAYE had they filed a paper return by 31 October 2018 or on online by the end of December, so it is definitely worth making a note to get ahead of the curve next time.

“Of course, having got through the process of filing a tax return, financial fatigue can kick-in and the natural inclination may be to avoid thinking about your tax and finances for another year. But in reality, getting your return in should merely be the starting pistol for making sure that, where possible, you utilise your various allowances before the tax year end at midnight on 5 April. These include pension and ISA contributions, switching assets or cash between spouses to optimise tax efficiency and potentially crystallising profits on assets to make use of the annual capital gains allowances. For some, using more specialist tax efficient schemes like Venture Capital Trusts and Enterprise Investment Schemes can also help reduce an income tax liability.

“A little time invested on planning and using the various options available, or spent seeking the help of a professional financial adviser, can lead to a significant improvement in your circumstances and might provide you with a tax cut far more generous than anything the Chancellor provided in his last Budget.”

Tilney have produced a tax year end checklist here: https://www.tilney.co.uk/news/your-201819-tax-checklist