The self-assessment deadline for 2023/24 tax returns will soon be upon us. It is important to know when your information needs to be submitted.
When is the Self-Assessment Deadline?
The deadline for the online submission of self-assessments is 31st January following the tax year. For 2023/24 returns, the deadline is 31st January 2025. This is also the payment deadline. You must ensure the tax return is submitted and paid before midnight to avoid penalties.
How Do I Know to Complete a Self-Assessment?
If you have previously completed a self-assessment, HMRC will notify you if a return is needed for that tax year. If you have met the criteria to complete a self-assessment for the first time, you will need to notify HMRC.
How do I Submit a Self-Assessment?
You can submit self-assessments through the HMRC portal. You will need our Unique Taxpayer Reference (UTR), which you will have received after registering for self-assessment.
If you are working with an accountant, they can submit the return on your behalf. We offer self-assessment services to clients across the UK. You can visit our page to learn more.
How Do I Pay my Self-Assessment Tax?
You can pay your self-assessment tax in a variety of ways. HMRC provide a breakdown of the available methods here.
Most individuals will make two payments a year, known as payments on account.
Is there a Fine for Missing the Deadline?
If you miss the deadline HMRC will issue penalties. Penalties are split into two types: late filing & late payment.
These penalties will increase over time. Submit and pay before the deadline to avoid additional charges.
I Need Help Preparing my Self-Assessment – Who Can I Talk to?
We understand that self-assessments are an additional task on top of your workload, and that it can be difficult to know what you can claim. If you need assistance to complete your self-assessment tax return, please contact us.
On 1st January 2023, changes were made to fines for late VAT filing and payments. Previously, the default VAT surcharge system was in place. This system meant that you would be fined a percentage of the VAT owed. This started at 2%, then increasing to 5%, 10%, and 15% every time a payment or VAT return was missed.
The new system implements a point system for late submissions, as well as new penalties and interest charges on late payments.
Late Filing Points System
The late filing point system works on the basis that every time VAT is submitted late, you will receive a penalty point. Once the penalty Point threshold is reached, a £200 penalty is applied. A further £200 penalty is issued for every late submission whilst at the threshold. The threshold is dependent on how frequently you submit your VAT return:
Accounting Period
Penalty Points Threshold
Annually
2
Quarterly
4
Monthly
5
HMRC will adjust both the threshold and the points you have been issued if you change your accounting period.
The penalty rules do not apply to the first VAT return, final VAT return, or one-off returns which cover a period other than those listed in the table above.
HMRC will issue a penalty decision letter to your registered business address if a penalty or penalty point has been given. This letter will offer a review with HMRC where you will be able to appeal the penalty. Also, penalties can be checked, and reviews can be requested through your VAT online account.
Late Payment Penalties
Late payment penalties have been introduced and can apply to any VAT that has not been paid in full by the due date. This is excluding payments on account and annual accounting scheme installments. The penalty you will receive is dependent on both the number of days that the payment is overdue, and if it is your first penalty:
First Late Payment Penalty
Second Late Payment Penalty
Payments up to 15 days overdue
None
None
Payments 16-30 days overdue
2% of the VAT owed at day 15
None
Payments 31 days or more overdue
2% of what was outstanding at day 15. Plus 2% of what is still outstanding at day 30.
Daily rate of 4% per year on the outstanding balance. This is charged from day 31 until the outstanding balance is paid in full.
A period of familiarisation has been implemented until 31/12/2023. This means that first late penalties will not take effect if a payment is made within 30 days of the payment due date.
Much like the late filing penalties, HMRC will notify you of a late payment penalty via a penalty decision letter and details of the penalty will be available through your VAT online account.
Late Payment Interest
Late payment interest will now be applied from the first day that a VAT payment is overdue until the day it is paid in full. The interest rate directly correlates with the Bank of England’s base rate. It is calculated as the base rate plus 2.50%. This means that the current interest rate is 7.75%.
Payments that are subject to interest include:
VAT Returns
Corrections and Amendments
HMRC VAT Assessments
Missed Payments on Account
Late payment penalties
Late submission penalties
If interest is being applied to an amount which should be paid in installments, the interest will be charged on the outstanding balance until the tax has been paid in full.
Unfortunately, HMRC does not have an appeals process for late payment interest. However, you can object to the interest for a variety of reasons, such as, you believe HMRC has caused a mistake or there has been any unreasonable delay, you dispute the relevant date or effective date of payment, or you are questioning the legislation. It is important to note that interest objections can only be accepted if the tax relating to the interest has been fully paid. To discuss interest objections with HMRC, contact the VAT General Inquiries Helpline.
VAT Repayment Interest
On the other hand, if you are owed a VAT repayment from HMRC will also be applied. Like the late payment interest, the interest rate is dependent on the Bank of England’s base rate. It is calculated as the base rate minus 1%; the rate is currently 4.25%. Interest will not be applied on early payments or payments made in error (such as paying £2,500 instead of £250).
If the VAT has already been paid to HMRC, the repayment interest is calculated from the later date of either when the VAT was paid or the payment deadline for the period.
If the VAT has not been paid to HMRC, the repayment interest is calculated from the day after the later date of either the payment deadline or when the VAT was submitted.
HMRC will only pay repayment interest if there are no outstanding VAT returns. Because of this, the interest will only be paid from the date that all outstanding VAT returns are received.
The end date for the interest will be when HMRC repays the VAT, or it is set off against a different VAT return. It can also be set off against other types of tax you may owe.
If You Cannot Pay
If you are aware that you will not be able to pay your VAT in full by a deadline, call HMRC’s Payment Support Service for guidance. They have a specific line relating to VAT payments. One option they may propose is a payment plan. You can find out what you will be asked during the set up process, or if you can set up a payment plan online, here. Setting up a payment plan could lead to penalties being reduced.
HMRC offer a flexible plan known as a Time to Pay arrangement which will cover any penalties and interest that has been applied. If this arrangement is put in place before a penalty deadline, the penalties will not be applied. However, if you do not adhere to the conditions of the arrangement and it is cancelled, the penalties will be applied. You can find out more about Time to Pay here.
Contact Us
If you require our services for VAT, or have any further questions regarding your accounts, please do not hesitate to contact us.
Last year, the government announced several significant changes to student loan plans. You may have noticed that your own loan deductions have changed since April 2023, or that a new plan will be implemented for this year’s students. In this blog we discuss how these updates will affect you.
Current Student Loan Schemes
Currently, there are four student loan repayment schemes. The scheme you pay through is dependent on criteria such as the country where you are based and when you started your studies. The current schemes are:
Plan 1 – Applies to all students, UK-wide, whose loans were taken before September 2012.
Plan 2 – Applies to English and Welsh borrowers from September 2012.
Plan 4 – Student Award Agency Scotland Loans
PGL – Postgraduate loans for England and Wales (PGL can also be called Plan 3)
You will only make repayments when your rate of pay passes the annual threshold. This, and the rate of deduction, is dependent on your loan scheme. The thresholds applied from April 2023 are in the table below:
Loan Plan
Previous Annual Threshold
Annual Threshold from April 2023
Rate of Deduction
1
£20,195
£22,015
9%
2
£27,295
£27,295
9%
4
£25,375
£27,660
9%
PGL
£21,000
£21,000
6%
Plan 5
A new student loan scheme called Plan 5 will be introduced for English individuals taking student loans from 1st August 2023, in place of Plan 2. The deduction rate shall remain at 9% of pay, but the threshold shall fall to £25,000 per year. This works out to £2083 per month, or £480 per week. This threshold shall remain until April 2028, after which it shall increase in line with the retail price index. This scheme will also increase the repayment period so that loans will be cleared after 40 years, rather than the usual 30.
Students on Plan 5 will not be expected to make payments until April 2026 at the earliest. This includes students who leave their courses early. The scheme will only apply to English borrowers as Welsh students shall remain on Plan 2.
Example:
If you were paid a salary of £26,000, you would only need to repay the 9% on the £1000 exceeding the threshold. This equates to £90 per year. If your salary was £30,000, you would be paying £450 per year.
By using this rule of £90 to pay per £1000 over the threshold you will be able to predict the contributions you are due to pay per year.
How are Student Loans Paid?
If you are employed, repayments are taken from your salary by your employer, much like tax and National Insurance. The amount deducted per pay period will be displayed on your payslips.
If you are employed but also complete a tax return you must include the total amount paid during the tax year. This figure will be reflected on a P60.
If you are self-employed the amount you owe will be calculated and included on your Self Assessment, and you will pay the amount at the same time as your tax. The figure can either be calculated before submission by your accountant, or by HMRC once it is submitted.
If you are self-employed and in need of advice, or if you are unsure if you need to complete a Self Assessment, please review the information on our page.
How to Apply for Student Loans
HMRC offer a step-by-step guide on applying for student loans. It will allow you to check if you are eligible and how large your loan can be. It also gives advice on reapplying during your study (which must be done each year of your course) and what happens with payments once you leave education. This guide can be found here.
FAQs
“Will my student loan go on my credit file?” – No, it doesn’t. This means that taking out student loans will not affect your ability to apply for a mortgage, for example.
“Is there interest on my loan?” – Yes, for Plan 5 loans the interest rate will be set at the rate of inflation for the current year.
“Does how much I owe on my loan affect how much I pay?” – No, as the amount you pay is solely related to your earnings. The remaining balance is not a factor.
“Can I make additional payments towards the loan?” – Yes. Additional payments can be made at any time during the repayment period; however, these payments cannot be refunded. You can find more information from HMRC here.
“Will I need to make repayments if I move abroad?” – Yes, you must still pay 9% on all earnings exceeding the currency equivalent of £25,000.
“When will I start repaying my student loan?” – If you are earning over the annual threshold, repayments will start the April after you leave university, but Plan 5 repayments will only start from April 2026.
“Are student loan contributions calculated before or after tax?” – Before tax. They are calculated the same way as National Insurance contributions.
“Will student loan repayments affect my pension contributions?” – The student loan repayment will be deducted before the pension contribution is calculated.
If you are usure of how your loan will affect your pay, please do not hesitate to contact us.
As businesses are starting to feel the financial effects of the current pandemic, job losses are rising and there is a possibility that some employees may have to be made redundant. This guide explains what redundancy is and outlines how it works, including redundancy notice periods, statutory redundancy pay and tax on redundancy pay.
Recent Comments