HM Revenue and Customs (HMRC) customers are under significant pressure as the deadline for self-assessment tax returns approaches rapidly. With the clock ticking down to January 31, 2025, taxpayers have been cautioned against incurring hefty penalties, with warnings of £100 fines looming for those who fail to submit their information on time.
Current estimates indicate approximately 3.4 million individuals have yet to file their returns for the tax year running from April 6, 2023, to April 5, 2024. This impending deadline primarily affects those who are self-employed or part of business partnerships, especially if last year’s pre-tax earnings exceeded £1,000. Further, various situations mandate the necessity for filing, including individuals with taxable incomes exceeding £150,000, those liable for Capital Gains Tax, and even those qualifying for the High Income Child Benefit Charge.
The need for compliance also extends to people with specific types of untaxed revenue. This category encompasses not only foreign income but also unreported gains from savings, dividends, commissions, tips, and property lettings. Anyone who falls under these categories must complete the self-assessment process.
Myrtle Lloyd, HMRC's Director General for Customer Services, has stated, "The countdown to the self-assessment deadline has begun, but there is still time to thoroughly prepare and file an accurate tax return by January 31." She emphasizes the availability of online resources to assist taxpayers, urging them to search "help with Self Assessment" on GOV.UK for guidance.
Taxpayer submissions are expected to reach around 12 million for the 2023-2024 tax year, prompting the call for comprehensive and accurate returns by the looming deadline. Late submissions not only incur fines but could also result in substantial interest penalties, currently set at 7.25% on overdue tax payments.
According to HMRC’s latest data, approximately 8.6 million taxpayers have already filed their returns. Despite the alarmingly high number of individuals still pending submission, officials maintain confidence. But numbers can sometimes be deceptive, with many tax experts expressing concern over HMRC’s customer service capabilities.
Critics have pointed out systemic inadequacies within HMRC’s service framework, particularly the struggles taxpayers face when trying to seek assistance. With many reports indicating unresolved queries and delayed resolutions, the organization has come under fire from multiple fronts. A recent report by the Commons Public Accounts Committee showcases growing dissatisfaction with HMRC’s handling of customer calls. The report, led by Sir Geoffrey Clifton-Brown MP, revealed only two-thirds of customer calls were answered, significantly below the target of 85%.
The service's shortcomings have led to public outcry, with reports indicating some individuals have faced too long wait times before being redirected or disconnected altogether. A notable incident highlighted the frustrations faced by one pensioner who mistakenly overpaid taxes, only to wait over a year for clarity—an obstacle only resolved through direct intercession.
John O’Connell, CEO of the TaxPayers’ Alliance, has voiced strong discontent, stating, "Taxpayers are sick of being left feeling helpless by HMRC." He has called for immediate reform of the organization to address these widespread grievances. This sentiment is echoed by Baroness Ros Altmann, who highlights how vulnerable populations, particularly those not digitally savvy, end up stressed and may face unjust penalties due to HMRC's operational delays.
Despite the critiques, HMRC maintains it is committed to improving service standards, with assertions from chief executive Sir Jim Harra claiming advancements have been made. Yet, this optimistic outlook stands counter to growing evidence of declining customer service performance.
The impending tax return deadline also intersects with increasing scrutiny of side hustles and secondary income streams, particularly as individuals look to supplement their earnings amid rising costs. Effective January 2025, online marketplaces like eBay, Etsy, and Vinted will be required to share sales data for users crossing certain transactional thresholds. This change aims to catch those potentially avoiding tax reporting on additional income sources, presenting another layer of complexity for the self-assessment form.
Experts like Tom Biggs from Wellers stress the importance of clarity when it pertains to side hustle incomes, urging taxpayers to understand when they need to include additional earnings. Biggs states, "If your side hustle income exceeds £1,000, then you must declare it to HMRC through self-assessment." He emphasizes the need to keep accurate records to avoid complications.
Those concerned about how secondary income might affect their overall tax status should be equally aware of the personal allowance thresholds, as exceeding limits can push individuals unexpectedly higher up the tax brackets. This nuance makes it more imperative for taxpayers to prepare properly and seek professional guidance where necessary.
With just days remaining to file returns, completing self-assessment correctly is not just about compliance; it’s about avoiding potential financial penalties and ensuring due diligence. For many, the warning signs are there: finding clarity and support from HMRC could mean the difference between meeting the deadline and suffering significant fines.
For more information on filing, exemptions, or available support, the HMRC portal offers resources to help, emphasizing accurate self-assessment as taxpayers navigate these deadlines.