With self assessment it is up to you to notify HMRC of how much tax you owe by completing a self assessment tax return with details of your income and gains.
You must notify HMRC by 5th October following the end of the tax year in which the income first arose unless you have already been sent a tax return to complete.
If you have untaxed income of less than £2,500 and you are in employment, HMRC will collect the tax through the PAYE scheme. But you must write and tell HMRC of the amount of income you have received.
If the income exceeds £2,500 HMRC will send you a self assessment tax return.
The deadline date for filing a paper return is 31st October after the end of the tax year.
The deadline date for filing a return online remains at 31st January after the end of the tax year.
Interest, surcharges and late filing penalties
The new penalties for late Self Assessment returns are:
• An initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;
• After 3 months, additional daily penalties of £10 per day, up to a maximum of £900;
• After 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
• After 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due. New penalties for paying late are 5% of the tax unpaid at 30 days, at 6 months, and at 12 months.
Keeping Tax Records
Records of all information used to complete tax returns must be kept for 22 months after the end of the tax year, or for 5 years and 10 months for those carrying on a business or who have income from letting out property.
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