Tax Tip
05 Jan 2010
Self Assessment Tax
By Michelle Farrelly, FPM Chartered Accountants
Q I filed my tax return before Christmas but due to cashflow problems I do not think I will be able to pay the tax I owe by the deadline of
A: You will not receive the £100 penalty as you have filed your tax return before the 31 January deadline, but as you have not paid your tax liability for the 2008/09 year, HMRC will begin to charge you interest on a daily basis starting from
If you have a large tax bill to pay by 31 January, don’t go into overdraft to pay it. The official rate of interest applied by HMRC is now at its lowest of 3% (just over 0.25% per month) but an overdraft can be as much as 19.9% per annum. On a £5000 tax bill this would result in bank interest of £82.92 per month but government interest of only £12.50 per month in comparison.
As long as you pay the the 2008/09 balancing payment by 28 February 2010, you won’t incur a penalty for not having paid by 31 January. A 5% surcharge will be imposed on any part of your balancing payment which remains unpaid at 28 February, with a further 5% surcharge on any outstanding amount at 31 July. These surcharges are due within 30 days of issue, and will also attract interest charges for late payment.
Unlike the interest arising, surcharges are only calculated on any outstanding balancing payment and not on your payment on account therefore if you are struggling with cash flow you should aim to pay at least your balancing payment by 28 February to avoid the 5% Surcharge.
The advice in this column is specific to the facts surrounding the questions posed. Neither the Democrat nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
For more details contact:
