HM Revenue & Customs figures show that 3,275 taxpayers filed their returns on December 25 last year. That’s on top of the 8,474 who filed on the 24th. It’s the same story, year after.
Instead of loading up on turkey, stuffing and Christmas pud, they are declaring their income and earnings expenses to HMRC.
It seems a strange way to spend Christmas, but each to his own.
While it is good to tuck into your tax return, there is no need to ruin this special day, as the annual deadline isn’t until midnight on January 31.
But if you do have to complete a self-assessment tax return, don’t hang around once the party season is over.
You don’t want to miss the January deadline, or HMRC will issue an automatic £100 penalty and no messing. Around 290,000 were slapped with a fine in the 2020/21 tax year.
Remember to pay any tax due, too, as a further 1.43million were penalised for failing to pay on time, up from 1.24million the year before.
HMRC will also charge interest on any unpaid tax, and there are more penalties if you still haven’t filed after another three months.
Filing your tax return is no fun but failing to do so is even more painful, said Emily Coltman, chief accountant at accounting software specialist FreeAgent. “Taxpayers have already been hit by record inflation and the energy crisis. Incurring tax penalties on top will cause further unnecessary pain.”
The first step is always the hardest, so if you have a quiet moment over the coming days, you could fill it by assembling all the necessary paperwork.
These include forms P60 and P11D from your employer, bank interest certificates, pension income certificates and details of any Gift Aid donations you’ve made to charity (you can claim tax relief on these). You do not need to include tax-free Isas.
Pension contributions attract automatic basic rate tax relief but higher rate tax payers must claim the additional 20 per cent relief on their return.
Married couples or civil partners should also check whether they are eligible for the marriage allowance, paid where one partner is a higher rate taxpayer, while the other earns below the £12,570 personal allowance.
Coltman said check all your paperwork is for the right tax year, which in this case is one that finished on April 5, 2023. “Don’t use a P60 with a previous year’s salary on it. Even if you were earning the same, the tax figure may be different.”
Now may be a good time to check your tax code, said Alice Haine, personal finance analyst at fund platform and coaching service Bestinvest. “Millions are wrong every year and it is your responsibility to check it, not your employer’s or HMRC’s.”
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Your tax code may be wrong if you have recently changed jobs, earned extra money from a side hustle or rental property, or retired. “You could get a generous rebate, although if you’ve been paying too little you may have to pay more,” Haine said.
Once the New Year is over, there is no time to lose, especially if you need phone support from HMRC, said Senga Prior, chair of the ATT Technical Steering Group. “HMRC is under-resourced and has reported higher call volumes and longer waiting times.”
HMRC recently announced that it will only answer priority calls in January, its busiest month of the year. Everybody else will have to find out the answers themselves online, or pay an accountant (who may also be snowed under).
Last year, HMRC waived late payment fines as a staggering four million still hadn’t filed their report one week before the January 31 deadline, in part due to the impact of the Covid omicron variant. It is unlikely to do so again.
Coltman warned: “You’re also more likely to make mistakes if trying to fill the form in a rush and may encounter log-jams in HMRC’s online filing service as others try to file all at once.”
Remember to include all relevant information, because HMRC has ways of finding out if you don’t.
If you didn’t file a tax return last year, you probably don’t need to do so now, unless your circumstances have changed. Yet every year, more than 12 million of us do. Happily, only a few will do so on Christmas Day. With luck, they’ll have more enjoyable things to do.
