‘Hundreds of thousands’ could be caught out by HMRC’s £10-a-day fine | Personal Finance | Finance

Financial experts have issued a stark warning that “hundreds of thousands” of individuals may be hit with fines from HM Revenue & Customs (HMRC) for late Self Assessment filings. Recently, the tax office has brought in a daily £10 fine for those who missed the Self Assessment deadline on January 31.

Personal finance experts raise alarms about the potential impact on many people due to this new penalty. Alastair Douglas, CEO of Totally Money, expressed serious concern over HMRC’s fresh tactic, noting that these fines come on top of existing penalties. He warned: “While the initial £100 fine might not have been enough to encourage some to get going, HMRC will start charging late filers an extra £10 per day.

“This is on top of the eyewatering 8.5 per cent late payment interest rate on outstanding balances.

“If in three months’ time you still haven’t filed your return, the taxman will hit you with a penalty of five per cent of the tax due or £300, whichever is greater.

“Any penalties need to be paid within 30 days, and can be done in several ways, including Direct Debit, bank transfer, or by cheque.”

Yet, Alastair did offer a glimmer of hope for those with genuine excuses for their delays. He advised: “If you have a ‘reasonable excuse’ you can challenge your penalty, and reasons include the death of a close relative, serious illness and issues with HMRC’s online services.

“If you’re struggling to pay your bill in full, then head over to the HMRC website, where you might be able to set up a payment plan, under a ‘Time to Pay’ arrangement.”

Claire Trott, the head of advice at St James’s Place, also expressed concern about the escalating stresses for those lagging behind on their tax returns, reports the Daily Record.

She said: “While completing a tax return is often a dreaded task, and one may choose to put it off, getting it sorted now could save you from significant financial penalties down the line.

“Up until now, late filers have faced a one-off fine of £100, but [from now] the consequences will become even greater. The £10 a day penalty will continue for 90 days, potentially adding up to £900 if the return is not submitted during this period.

“Further penalties of 5% of the tax due or £300 (whichever is greater) will apply at both the six-month and 12-month mark for those who still haven’t filed.”

Individuals registered for Self Assessment must complete their tax returns even if they don’t owe any tax and overlooking communications from HMRC is not advisable.

In addition, Claire underscored that while filing your tax return promptly may not cancel previously incurred fines, it could definitely curb the onset of new penalties.

She elaborated: “The quickest and simplest way to do this is to complete HMRC’s online form. While the process may seem daunting, there are plenty of tips and guidance available on the HMRC website, and if your finances are particularly complex, speaking to a financial adviser is always a good option for those who are able.

“With [the] penalties likely to cause alarm for those who are unaware, the most important thing is not to rush the return process as this could cause you to leave out vital information that could result in paying more tax than necessary.”

She concluded: “There are a number of details – such as Gift Aid payments, and necessary work expenses – that can be easy to forget about when filing a return but can amount to significant tax relief. It’s important to take time to include all relevant information to ensure you receive the full tax relief you’re entitled to.”