Lower-income self-employed workers more likely to miss the Self-Assessment deadline

Recent research from PensionBee has revealed that lower-paid self-employed workers are more likely to miss the Self-Assessment filing deadline than higher earners.

The findings were obtained through a Freedom of Information request submitted to HMRC.

They showed that taxpayers earning below the basic rate threshold were twice as likely to file late during the 2023-24 tax year.

The data found that 5.9 per cent of lower-income self-employed taxpayers missed the deadline.

This is much higher than the 3.1 per cent of basic rate taxpayers, 2.7 per cent of higher rate taxpayers and 2.6 per cent of additional rate taxpayers.

It might just be that lower-income workers are struggling to balance their tax responsibilities and the challenges of running a business.

However, failing to stay compliant with your tax returns could put you at risk of penalties or interest charges and this is something that can be avoided.

Why are lower earners struggling with filing on time?

Managing taxes and deadlines can feel particularly overwhelming for self-employed individuals.

You are having to track your income, expenses, deadlines and payments to yourself, while trying to manage your daily operations.

Lower earners are also more susceptible to cash flow difficulties and this can lead to delays in preparing returns or paying them.

PensionBee highlighted that lower-earning taxpayers had a lack of awareness around tax and financial planning.

Their research found that nearly 75 per cent of self-employed individuals without a pension were unaware that pension contributions receive tax relief.

What happens if you file your tax return late?

Missing the Self-Assessment deadline can result in penalties and additional costs knocking at your door.

HMRC can issue fines even if you do not owe any tax and this is why it is crucial to know the filing dates.

The deadline for paper tax returns is 31 October and online tax returns must be submitted by 31 January.

If you miss these dates and file late, you could face:

• An automatic £100 penalty for missing the filing deadline
• Daily penalties of £10 per day after three months (up to £900)
• A further penalty of five per cent of the tax due or £300 after six months, whichever is greater
• Another five per cent or £300 charge after 12 months, whichever is greater

These costs can start to add up and result in late payment penalties and interest charges on any outstanding tax liabilities.

Not having an accurate tax return can also make it harder to budget accordingly, plan cash flow or prepare for future liabilities.

Then there is also the time it takes to resolve these issues with HMRC and this can take longer if you have to appeal or set up a payment plan.

Supporting your tax responsibilities

Your Self-Assessment tax return doesn’t have to be something scary you avoid or even something you underestimate.

Our team is here to help you submit your Self-Assessment tax return accurately and on time.

We will help identify any allowable expenses or tax reliefs and steer you clear of any costly errors or penalties.

If you are concerned about being able to afford your tax bill, we can communicate with HMRC on your behalf and help arrange a manageable payment plan.

You do not have to manage your tax liabilities on your own and we can help keep you compliant.

For further support or advice on filing your tax return, get in touch.