Approximately 40% of the penalties collected for late-filing of income tax self-assessment returns are attributed to individuals who do not have any income tax liability whatsoever.
This intriguing statistic underscores the importance of understanding the tax regulations. A significant portion of those facing penalties might not have been aware of their obligation to file a self assesment.
It’s crucial to note that in the United Kingdom, the requirement to submit a self-assessment form remains in effect regardless of whether your income is below the taxable threshold. This means that even if your earnings do not surpass the level at which income tax is imposed. You are still obligated to complete and submit a self-assessment form to the tax authorities. This requirement is designed to ensure that the tax system maintains accurate records of all taxpayers and their financial circumstances.
For those who do miss the deadline, there are financial consequences. If you are late by up to three months in submitting your self-assessment, you will incur a penalty of £100. However, if your delay extends beyond three months. An additional daily fine of £10 will be imposed, with a maximum cumulative penalty of £900. This escalating penalty system is in place to encourage timely compliance with tax deadlines and deter further delays in the submission of tax-related information. Yet it ends up hurting those who are the most finically vulnerable. Which is reflected in the fact that between 2018 and 2020 400,000 people who received penalties on their failure to submit a self assessment earned less that 13,000 annually.
In essence, this information highlights the importance of being well-informed about your tax obligations. Regardless of your income level, and the financial repercussions that can result from late filing. It also underscores the government’s efforts to enforce tax compliance through a graduated penalty system. Emphasizing the significance of timely and accurate tax reporting for all taxpayers. We can help you with your self assessments