New figures show self-assessment taxpayers owe HMRC more than £1.6 billion in late payments on 2017/18 tax bills.
The deadline for 2017/18 submissions came and went on 31st January 2019, with more than 11.5 million taxpayers beating the midnight cut-off – a new high.
Despite a record number of tax returns submitted early this year, not all taxpayers have paid their liabilities to the Revenue.
The £1.6bn currently estimated to be owed for 2017/18 is expected to surpass the final total of £1.83bn paid late in 2016/17.
That would continue a trend – the amount of tax owed by those who missed the payment deadline has increased every year for the last three years.
This figure rose from £1.65bn in 2014/15 to £1.76bn in 2015/16, before climbing to last year’s figure.
Given the unprecedented volumes of people who filed tax returns via self-assessment in 2017/18, an increase in late payments is hardly surprising.
According to the Office for National Statistics, the UK’s self-employed population increased from 3.3m in 2001 to 4.93m in March 2019.
But taxpayers going through self-assessment for the first time often do not fully understand how the self-assessment tax system works.
For example, tax on first-year profits is paid at the same time as the first payment on account for estimated tax owed on predicted second-year profits.
This lack of understanding can lead to unexpectedly large tax bills in the early years after registering as self-employed.
A spokesperson for HMRC said:
“We want people to pay on time rather than receive penalties.
“If customers are unable to pay on time, they may avoid penalties by contacting us as soon as possible and we can discuss whether it might be possible to set up a payment plan.”
In January 2018, the Revenue banned taxpayers from using their personal credit cards to pay their annual tax bills.
Personal debit cards can still be used to pay a tax bill, however, as can company or corporate credit cards.
Speak to us about your self-assessment tax return.