More than 770,000 taxpayers still file a paper tax return and, if you’re among them, you have until midnight on 31 October to submit your forms to HMRC. But what if you’re set to miss the deadline?
While most Brits pay tax through their earnings, some are required to pay by filing a return either on paper or online. Last year, HMRC reported that 771,331 returns were filed on paper, making up 7.22% of the total number of self-assessment tax returns received for the 2016-17 tax year.
Which? explains who needs to pay tax by self-assessment, how filing a paper return works and what your options are as the deadline draws closer.
What happens if I file my tax return late?
Before you mail off your paper tax return, think carefully about whether it’s likely to arrive on time.
If a paper tax return is received later than 31 October, HMRC will issue a late penalty – even if you mailed it before the deadline.
There is an initial £100 fixed penalty, which applies even if you don’t have any tax to pay, or if the tax due has been paid on time.
If your tax return is up to three months late, there’ll be an additional penalty of £10 a day, up to a maximum of £900. This is added to the initial £100 fee, for a fine of £1,000.
After six months, you’ll either be charged £300 or 5% of the total amount of tax due (whichever figure is higher) on top of the existing charges above.
If you’re 12 months late, you’ll be charged the higher option of another £300 fine or another 5% of the tax due, on top of all the penalties above. In serious cases, you can be fined 100% of the tax due, which will double your bill. We explain how the fines work in our guide to late penalties.
But you can avoid a fine by choosing to file online. The deadline for online returns is 31 January, giving you an extra three months.
Keep in mind that you can’t submit both types. So if you’ve already sent off a paper return, you can’t protect yourself from a late fee by filing online instead.
- Get a head-start on your online return: Tot up your bill and submit your tax return direct to HMRC with the Which? tax calculator
How do I file a paper return?
A paper tax return is a series of forms sent by HMRC that you’ll need to fill out and send back. It’s used to record your financial situation so that your tax for the previous tax year can be properly calculated.
The forms you’ll need to fill out will depend on your circumstances. The main tax return forms are called SA100. You’ll have to fill out your personal details, tax reliefs that you qualify for, and your types of income.
You may also need to fill out supplementary pages, depending on how you earned income over the past tax year. Self-employed people may need to file either a short-form SES1/SES2 document if their turnover was less than £83,000, or the longer SEF1 to SEF6 version if they earned more.
You can see the full list of forms in our guide to paper tax returns.
If you’re planning on filing a paper tax return, see our checklist below to make it as easy as possible.
- Find out more: Paper tax returns – our guide explains the sections of the main tax return, and outlines supplementary pages you may also need to fill out.
Can I file online instead?
The majority of people who pay tax by self-assessment now do their tax returns online, as it means you have a later deadline and many people find it more convenient than paper returns.
What’s more, if you file online before 30 December and you owe less than £3,000 in tax, you can opt for this to be collected through PAYE over the next 12 months, rather than a larger instalment.
The deadline for online tax returns is 31 January 2019.
If you want to submit your tax return online, the Which? tax calculator is an easy-to-use and jargon-free tool, which offers personalised tax tips – plus, you can submit the form straight to HMRC.
The video below explains how the calculator works.
Alternatively, you can file online using the HMRC portal.
- Find out more: Online tax returns
Who needs to pay tax by self-assessment?
The simple answer is, if HMRC sends you a letter saying you need to submit a self-assessment tax return, then you must do it – even if it turns out you don’t need to pay any extra tax.
If HMRC doesn’t request a tax return from you, and any of the following circumstances apply, then you should also submit a self-assessment tax return:
- you’re self-employed, a business partner or a director of a limited company
- you’re an employee or pensioner with an annual income of £100,000 or more
- you have pre-tax investment income of £10,000 or more
- your income, or your partner’s income, is more than £50,000, and you’ve been claiming child benefit
- you have income from abroad
- you were a trustee of a trust or registered pension scheme
- you received a P800 form from HMRC to say you didn’t pay enough tax last year
- you’re a ‘name’ at the Lloyds of London insurance market
- you’re a minister of religion
- you’re a trustee or representative of someone who has died.
If HMRC thinks you’ve purposely tried to avoid paying tax, you could get a hefty fine.
- Find out more: Who should submit a tax return?