Number of individuals submitting self-assessment tax returns over Christmas balloons by 55%
More than 40,000 people completed their self-assessment tax return between Christmas Eve and Boxing Day, data from HM Revenue & Customs shows.
Over the same three-day period last year, 25,769 people submitted their returns, HMRC added meaning a 55 per cent surge this festive period.
Over 4,400 self-assessment taxpayers filed their tax return online on Christmas Day, representing a slight decline from last year’s figure of 4,757.
Between 3pm and 4pm proved to be the most popular time to file online self-assessment tax returns on Christmas Day, with 368 filing their return between these times.
According to HMRC, 11,932 people submitted their tax return on Boxing Day, with the most popular time being from 4pm to 5pm, and 1,108 filing during this timeframe.
Over 23,700 people filed on Christmas Eve instead of last-minute shopping and wrapping. The most popular time was 11am to midday, when 3,458 filed their tax return, HMRC said.
Self-assessment: You need to pay the tax you owe by midnight 31 January 2025
Personal finances have been sharper focus this year, with the Autumn Budget playing heavy on the minds of Britons.
Self-assessment taxpayers have until 31 January 2025 to file their online return and pay the tax they owe to HMRC. For paper returns, the deadline was 31 October 2024.
Anyone who files their tax return before 30 December may have the option of paying any tax owed through their PAYE tax code.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘People who need to file a self assessment return and already have can enjoy the rest of the festive period knowing they’ve got it wrapped up for another year, and can enjoy singing Auld Lang Syne knowing their tax affairs are in order.
‘For those who haven’t started yet, our online service is available 365 days a year so there’s still a chance to get it done before 2024 is out. Go to Gov.uk and search “self assessment” to access the online help and start today.’
Five tips to help your tax planning
Together with Charlene Young, AJ Bell’s pensions and savings expert, This is Money outlines five ways to get your self-assessment tax affairs in order and avoid HMRC penalties.
1. Double check you need to file a tax return
Even if you think you have nothing to pay, you still might need to file a return for the tax year or you could face penalties. These start at a one-off £100, with more to pay if you are over three months late.
Circumstances requiring a tax return include being self-employed and earning more than £1,000, paying capital gains tax on something you sold or transferred for a profit, paying the high income child benefit charge or being a partner in a business.
You must also file a return if you had an income of more than £150,000 in the last tax year.
Even if none of the above apply to you, you might still have to file a tax return if you have received more than £1,000 returns from savings and investments in the tax year.
2. Get your statements sorted
Your savings and investment providers should have sent you an annual summary or statement after 5 April detailing what you earned with them for the tax year, as well as details of the gains or losses on any investments you sold in that time.
You should check for savings and investment income, namely interest and dividends, as well as gains you have made on selling investments outside Isas or private pensions.
You will pay tax on interest earned on your cash savings that exceeds the personal savings allowance, which currently stands at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
Additional rate taxpayers get no exemption and pay tax on all cash interest they receive outside of a tax shelter.
HMRC will check what you’ve declared on your tax return against the information your bank or building society send them, and any tax already collected by a tax code adjustment that year.
The tax-free allowance for dividend income dropped again in 2023/24, to just £1,000 for the tax year. In previous years it was as high as £5,000 a year, but cuts to the allowance mean millions more people are now caught in the dividend tax net.
You will pay tax on dividends above the allowance at 8.75 per cent, 33.75 per cent or 39.35 per cent, depending on your other income.
For the current tax year, from 6 April 2024 to 5 April 2025, the dividend tax threshold is just £500.
For capital gains declarations, although changes to CGT were announced in the Budget this year, gains made when you sold or transferred investments in the latest tax year will still be taxed at the previous lower rates of 10 per cent or 20 per cent, depending on your other income that year.
3. Claim pension tax relief
Anyone paying into a self-invested personal pension between 6 April 2023 and 5 April 2024 would have received basic rate relief of 20 per cent automatically.
This adds an automatic top up to pension contributions, meaning, for instance, a £2,000 personal contribution would automatically be boosted by £500 to £2,500.
However, higher rate taxpayers need to claim the extra £500 tax relief they are owed from HMRC.
An additional-rate taxpayer could claim 25 per cent tax relief from HMRC on top of the 20 per cent relief they receive automatically.
AJ Bell’s Ms Young, said: ‘Many people don’t realise they need to claim for pension tax relief, especially because it is only necessary with some types of pension scheme, but not others.
‘If you are paying into a “net pay” pension scheme, your contributions will be taken from your pre-tax salary, meaning income tax relief is usually paid automatically.’
4. Take care over the child benefit tax trap
Thresholds for clawing back child benefits are higher now, but 2023/24 taxpayers with children need to be aware of the old rates.
Child benefit for 2023/24 was withdrawn gradually once you or your partner earn over £50,000. The benefit was completely extinguished once you hit £60,000.
If you need to repay some or all of your child benefit payments for that year and your tax code was not adjusted already to account for it, you will need to repay via self-assessment.
HMRC will catch up with those who fail to do so, and they may incur an extra penalty as a result.
5. Don’t forget to pay the tax itself
Irrespective of when you file your tax return, make sure you have paid what you owe by midnight on 31 January 2025.
If you do not, you will start to accrue daily interest from 1 February. The annual interest rate charged by HMRC is substantial, at 7.25 per cent.
If you are having difficulty paying, you might be able to agree a payment plan online with HMRC, as long as you owe £30,000 or less.
As well as paying the correct amount of tax for the self-assessment return, payments on account also need to be factored in.
Payments on account are tax payments made twice a year by self-employed self-assessment taxpayers to spread the cost of the upcoming year’s tax. They can be substantial.
You can apply to reduce your payments on account for the next year if you think your earnings will be significantly lower than before.
