We all have to pay tax and there are penalties if you pay your tax late or file your tax late. But HMRC are now bring in a new regime, the Late Payment Penalty that will penalise you at an early stage of default and the penalty is directly related to the amount of tax owed.
This new system will affect the below
self employed and landlords who earn more than £10,000 per year must comply with Making Tax Digital from 6th April 2024. According to the UK Government website 'Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is
Making Tax Digital will require tax payers to make returns 4 times a year online and allows HMRC to see in more or less real time what tax is required.
The best way to deal with tax is to plan as much as you can and have a saving pot ready so that the tax bill can be paid quickly and will little impact on your business cash flow. With the new Late Payment Penalty rules you will face fines if you are 15 days late with your payment. The penalty will be 2% of the tax due when payment is up to 15 days late and if tax is still outstanding after 30 days there is a further fine of 2% on the outstanding tax. If you have issues paying then contact the HMRC before they contact you.
Whats next ...
If you have any questions then it is vital you ask your accountant early so you do risk being hit by the Late Payment Penalty.
You need to ensure that you submit your tax returns on time and in full, get yourself ready for Making Tax Digital, make sure you pay on time and if you have any issues then contact the HMRC and keep friendly with your accountant.
