One week left to file late tax return or miss out on up to £7,500
The self-employed who are adversely affected by the coronavirus crisis are eligible for financial help from the government.
As part of the Self-employment Income Support Scheme (SEISS), they will be able to receive a taxable grant worth 80% of average monthly profits based on the last three years of tax returns, up to a maximum of £2,500 a month.
The SEISS grant will be subject to Income Tax and National Insurance Contributions but it does not need to be repaid.
However, one of the requirements is that you must have submitted your self-assessment return for the 2018/19 tax year. See YourMoney.com’s Self-employed workers to receive help for full eligibility criteria.
Announcing the scheme three weeks ago, Chancellor Rishi Sunak said for those self-employed workers who missed the January 2020 tax return deadline, they will be given up to Thursday 23 April to submit their return (and pay tax owed) in order to be eligible for the grant.
The scheme will open in June with HMRC contacting eligible workers by mid-May, and it will be available for three months, but may be extended.
As such, anyone missing the new deadline will potentially miss out on up to £7,500 from the government. But the government confirmed ‘HMRC will review any late returns in the usual way’.
Penalties and tax return help
Nearly a million taxpayers missed the 31 January 2020 tax return deadline so they were hit with an automatic £100 penalty, even if there was no tax to pay or if the tax due was paid on time.
HMRC also applies additional penalties for paying late of 5% of the tax unpaid at 30 days.
It wasn’t able to confirm how many 2018/19 tax returns are still outstanding but did confirm penalties still apply.
For those who will struggle to pay the tax bill, HMRC has set up a Time to Pay arrangement and has a coronavirus helpline, plus people can call or make enquiries via webchat or twitter (just don’t give away personal information on social media).
Kay Ingram, director of public policy at independent financial advisory firm, LEBC group, said those who have a government gateway account should file online without delay.
“Others who may not have one may need to seek professional help from an accountant or tax adviser who will be able to file as their agent. If eligible, the SEISS payment could be worth up to £7,500 so filing without delay is advisable.
“Tax is usually paid in two instalments with the first due in July and a final payment in January following the end of the tax year. Taxpayers have been able to defer July tax which should help to ease cash flow. But the tax due on last year’s profits and income is still payable, so taxpayers should be prepared to have this money ready for payment next January.”
Ingram added that for those who may have spent some money set aside for their tax bills to pay for more immediate financial pressures, may still be eligible to claim Universal Credit. The DWP has confirmed business savings won’t count towards the capital limit calculations.
She said: “Cashing in long-term savings and pensions or borrowing will carry different consequences for each person and the tax due and any penalties or loss of interest or dividends should be taken into account before accessing funds.
“Financial advisers will be able to advise on these matters and help each family optimise how they deal with short-term cash flow issues while maintaining long-term plans. Information is also available from the Money and Pensions Service and Citizens Advice.