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More than 1.1mn UK taxpayers missed the January 31 self-assessment filing deadline, a 10 per cent rise on last year, according to data from the tax authority.
Their failure to file will generate at least £110mn for HM Revenue & Customs because all late filers face an immediate £100 fine, with the potential for further penalties.
There are also penalties for failing to pay on time. They comprise 7.75 per cent annual interest on the tax due, charged on a pro-rata basis until payment is made, and additional fines of 5 per cent of the tax due after 30 days, six months and 12 months.
Tim Stovold, partner at accountants Moore Kingston Smith, said late filing “continues to be a windfall for HMRC”.
Overall, however, a record number of people filed on time, as more individuals were forced to complete a self-assessment return due to a multiyear freeze on tax thresholds.
Figures released by HMRC on Thursday showed 11.5mn people submitted a self-assessment return by midnight on January 31 — up from 11.4mn the year before.
Some only just beat the clock however, with 778,068 people completing their return on January 31, including 32,958 who submitted theirs in the last hour of the day.
Of the 12.1mn returns that HMRC had expected to be filed, 11mn were submitted on time — leaving an estimated 1.1mn people who missed the deadline. There were a further 554,000 unsolicited returns.
Tax experts said the record number of submissions was partly the result of the government having cut allowances and frozen many tax thresholds since 2022.
“It’s not surprising it is a record because every year more and more people get dragged into needing to file a tax return,” said Helen Thornley, technical officer at the Association of Taxation Technicians, a professional body.
Freezing thresholds, rather than raising them in line with inflation increases tax receipts as rising wages and asset values tip ever greater numbers of people into the tax system or on to higher rates, a phenomenon known as “fiscal drag”.
Many of these people will then be required to fill out self-assessment returns for the first time.
“Higher interest rates and an unchanged tax-free personal savings allowance will have forced more people into declaring tax owed on savings interest compared to last year,” said Charlene Young, pensions and savings expert at investment firm AJ Bell.
More people would also have had to pay a child benefit high income charge and report it via self-assessment, she said. The threshold for this had “not budged” from the £50,000-£60,000 taper introduced in 2013.
Another reason for the increase in filed returns was the success of HMRC’s nudge letter campaigns, particularly targeting investors in cryptocurrencies and offshore assets, according to Mike Crellin, tax director at UHY Hacker Young, an accountancy firm.
Meanwhile, Stovold said the number of returns and penalties for late filing for the forthcoming 2023-24 self-assessment deadline would probably “dramatically increase”.
“High interest rates mean that many more people will have taxable income that exceeds allowances — which were designed to cover only small amounts of savings income,” he warned.
Myrtle Lloyd, HMRC’s director-general for customer services, thanked the “millions of self-assessment customers and agents who met the deadline” this year.
The tax authority called on anyone who had yet to file to do so as soon as possible, noting that people may be able to pay unpaid tax in instalments if necessary.
Late filing of self-assessment tax returns attracts an initial £100 penalty, which applies even if there is no extra tax to pay or if the tax due is paid on time. After three months, there are additional daily penalties of £10 a day, up to a maximum of £900. After six months, there is a further penalty of 5 per cent of the tax due or £300, whichever is greater. After 12 months, another 5 per cent or £300 charge applies, whichever is greater.
Taxpayers can appeal against the £100 penalty if they believe they have a reasonable excuse.
