Whilst the 31 January deadline is well known to those familiar with self assessment, many taxpayers still leave it until the very last minute to submit their return. Late returns incur an automatic penalty of £100, with higher penalties due for further delays. Not paying your tax within 30 days will also add an extra 5 per cent surcharge to your bill.
Unfortunately, in your haste to submit the return before the deadline you do run the risk of not taking enough care to make sure all income and gains are correctly included. Omitting income or gains from your return can lead to HMRC enquiring into your return which will inevitably lead to more cost, interest and possibly penalties. You can repair the return after the deadline although this isn’t ideal. If a repair of the 2018/19 return is required it must be submitted by 31 January 2021. But if you are in the habit of leaving it until the last minute you can see an obvious flaw in this safety net.
Along with many taxpayers, including those who have not previously needed to submit a return, you may have received statutory interest on a PPI pay-out in 2018/19. This interest is taxable and if you have no remaining personal savings allowance or personal allowance to cover it then tax is payable. On the other hand, if when combined with other savings income for the year, the PPI interest falls within your personal savings allowance, or if it falls within your personal allowance, then no tax is payable. You may even be able to reclaim any tax deducted from the interest. As this source of interest is unlikely to be a regular occurrence it will be very easy to miss so look out for it.
Changes to main residence relief for capital gains will be certain to catch you out if you leave future year’s returns until the last minute. Currently, letting relief can be available where the whole of the home is let out after a qualifying period of occupation. But from 6 April 2020 letting relief will be restricted to only those periods where the tenant shares occupation of the main residence. If you have let the whole or part of your home at any time and are intending to sell your home, you should start gathering the information as soon as possible so this one doesn’t catch you out in the future.