14/01/20

UK: Tax Filing Season Looms for Expats.

As published on internationalinvestment.net, Monday January 13, 2020.

Britons living overseas should take extra care since with HMRC's deadlines since first time filers can only access the self-assessment online system if they have the right tax references and passwords, a document that can take up to three weeks to arrive in the post.

With the clock ticking down to the 11.59pm, January 31 deadline, about 11 million people are required to submit a self-assessment tax return. Before anyone can complete a tax return, they must have a Unique Taxpayer Reference (UTR) and activation code from HMRC. This can take a while to receive, especially for expats overseas.

First time filers should make sure to register with HMRC online services immediately.

"There is time to avoid a penalty if you are one of the millions of people yet to complete and submit a tax return online for 2018/19"

Missing the deadline because a UTR was late is not a reasonable excuse for late filing and automatically clocks up a £100 fine.

"There is time to avoid a penalty if you are one of the millions of people yet to complete and submit a tax return online for 2018/19. If you have not yet registered for online filing this process can take a few weeks so you will need to act now. HMRC urge anyone who is expecting to find it difficult to pay their tax to get in touch with them as soon as possible," said Victoria Todd, head of Low Incomes Tax Reform Group (LITRG).

"You may have started your tax return but are stuck with the tax treatment of a particular expense. Or you may be unsure if parts are correct or even if you still need to file a tax return.

"You should double-check that you have correctly submitted your return online once you have fully completed it. You may complete your tax return and print off a draft return and tax calculation but not realise that you also need to submit the return as the last step of the online process. You should get a submission receipt from HMRC once the process is completed if you have used HMRC's online filing system correctly."

After three months, there are additional penalties of £10 per day, up to a maximum of £900. After six months, there is a further penalty of 5 per cent of the tax due or £300, whichever is greater. After 12 months, another 5 per cent or £300 charge applies, whichever is greater.

The tax return deadline applies to you and your freelance business if you are self-employed and earned more than a £1,000 in tax year 2018/19 - that means, you earned more than £1k between April 2018 and March 2019.

The deadline also applies if you're a partner in a business partnership or if your income in the last tax year was more than £100,000.

Around 750,000 taxpayers miss the Jan 31 deadline each year, often simply because they are unaware they need to file a return. It's a common misconception that filing always leads to paying extra tax: sometimes it can trigger tax reliefs and refunds.

HMRC estimate that around 54% of taxpayers have already filed their returns with more than 5.6 million of those completed online.