UK Markets closed

UK's self-employed urged to use tax return extension wisely

Lucy Harley-McKeown
·3-min read
Budget planning concept,Accountant wear mask is calculating company's annual tax.Calendar 2019 and personal income tax forms for those who have income under US law placed on home desk.
Every year, millions of people leave filing their tax return until a week before the deadline and this year, a record 1.8 million missed the deadline to file on 31 Jan. Photo: Getty

Tax experts are urging the UK’s self-employed to use the filing deadline extension wisely, as the clock ticks down to the new submission date.

Every year, millions of people leave filing their tax return until a week before the deadline and this year, a record 1.8 million missed the deadline to file on 31 Jan.

In a year that’s been repeatedly described as unprecedented, HMRC has made this never before seen move to not issue any late filing penalties for a month to help taxpayers and agents who were unable to meet the deadline.

Late filing penalties will not be issued for online tax returns received by 28 February on the basis that there’s an assumption of a valid reason. This follows an earlier announcement that people could appeal any penalties.

READ MORE: 'A quarter' of self-employed UK workers could face double tax bill this January

Mike Parkes, technical director at GoSimpleTax said: “We’d urge people not to push this to a side until the end of February and use the time wisely to get their affairs in order, ensure they get it right and, if needed, arrange a payment plan across 12 months.

“The fact is people have been impacted by COVID-19 and this month, many are juggling work, home schooling and a national lockdown.”

It has been a tough year for the self-employed. 44% of the 500 self-employed people GoSimpleTax surveyed said they’d experienced a fall in revenue or lost customers. Another 26% said lockdowns had prohibited trade. Only one in five surveyed said their finances hadn’t been impacted by the pandemic.

“The government has recognised people need some breathing space – there’s now five weeks to break the task down and for people to get on top of their tax,” said Parkes.

Of the 500 people surveyed, 38% said they wouldn’t be putting off their tax return.

READ MORE: HMRC to waive some late tax payment fines

Older professionals were less likely to put off filing with 45% of over 55s saying they don’t procrastinate this task compared to only 17% of 16-24 year-olds who said they didn’t plan to put this off.

The research also found women are more likely to leave their self-assessment until the last minute with 16% agreeing with this statement compared to only 10% of men.

Beyond procrastination, the top three reasons for putting off filing were: not understanding tax; struggling with the HMRC website and fear of the unknown.

“The most common pitfalls to look out for according to our research are ticking the wrong box; assuming you don’t have to declare something as you’ve not made a profit and putting the wrong information down,” said Parkes.

WATCH: What is a credit rating and why does it matter?