Over 475,000 self-employed workers are set to miss the deadline to complete their tax return, a study finds.
This follows HMRC figures, where 3.8 million taxpayers were yet to file their returns for the 2022/23 tax year with just a week remaining.
Ahead of tomorrow’s deadline, around a quarter (22%) are concerned about the financial implications of missing the cut-off date, or making an error when completing the self-assessment.
Completing the return on time is proving to be daunting for many self-employed people too. A tenth are struggling to file the form due to a lack of financial knowledge, and 8% find the calculations of their income to be complex.
Men aged between 25 and 34 are most likely to send their returns late, as 16% said they will miss the deadline when asked by Handelsbanken Wealth and Asset Management.
Fines for filing late begin at an automatic £100 (even if there is no tax to pay) and continue to rise the longer the delay. To avoid a fine, the HMRC has asked people to contact them before 31 January if they feel the deadline will be missed.
The penalties are as follows:
- after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
- after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater
- after 12 months, another 5% or £300 charge, whichever is greater
Meanwhile, the growing numbers of those battling with their self-assessment signify a rise in people exploring different forms of employment. Over half (54%) of the 2,000 adults surveyed declare themselves as being a PAYE employee with no extra income. Whereas a fifth (6 million) earned some form of additional self-employment income in the last year.
This marks a rise from 4.8 million in 2017, according to the Office for National Statistics.
A third of people become self-employed (33%) to follow their passion, while the impact of the cost-of-living crisis on households led to 17% looking to boost their funds to afford rising bills.
Self-assessment tax returns ‘challenging for substantial numbers’
Mark Collins, head of tax at Handelsbanken Wealth and Asset Management, said: “Self-assessment returns are clearly challenging for substantial numbers of the self-employed, with many at risk of missing the 31 January deadline and others struggling to complete returns.
“HMRC says that those with a reasonable excuse for missing the deadline may avoid penalties, but there is the risk of a £100 fine even if there is no tax to pay, and penalties can mount up if returns are more than three months late, with additional penalties for paying outstanding tax late.”
