Starting and running a business can be all consuming so keeping track of important deadlines can often get pushed to the back of the to do list.
The HMRC Deadlines are as follows:
- Company Tax – filed online within 12 months of the end of the company accounting period.
- Corporation Tax – due 9 months and 1 day after the end of the accounting period.
- VAT – due normally one month and 7 days after the end of the quarter.
- Self Assessment Tax Returns – due by 31st January after the tax year end*.
*Payments for Self-Assessment Tax Returns are due on 31st January and 31st July if you are required to make payments on account.
At Spotlight Accounting, we’ve put together this handy guide should help you understand when your deadline for filing your tax return with HMRC is, and when payment is due.
Why should you submit your tax returns before HMRC deadlines?
In most cases submitting a tax return involves preparing annual accounts. The sooner these are prepared the sooner you know how much tax you have to pay and can save for any tax that is due. More importantly if you are preparing accounts just before the filing deadline, the information is going to be up to 9 months old so this can have a significant impact on your profits.
Let’s take a look at the example of a limited company selling clothing with a financial year end of April 2022:
Working to the HMRC deadline for filing annual accounts, you would need to review these numbers in January 2023. Looking at the accounts earlier could have helped you identify that the gross profit margin had dropped. This could have been due to, for example, a supplier price increase in May 2021 that should have increased the cost of the clothing by 9% rather than the 5% actual increase. For a business that has sales of £150,000, the lost income per annum is £6,000. Preparing the accounts after the financial year end would have spotted this up to 8 months earlier, potentially saving the business £4,000.
The sooner small businesses prepare accounts after the accounting period the better as they know how much tax they need to pay and take action. Filing your Self Assessment Tax Return or Company Tax Return online early does not mean you need to pay your tax any earlier.
As long as HM Revenue and Customs receive payment of tax before the due date then there are no penalties or late interest rates applied.
What penalties are there for late tax returns?
Corporation Tax returns
For company tax returns that are filed late, there is an automatic penalty of £100. After 3 months, there is another £100 penalty to pay.
After 6 months, an additional 10% of the estimated Corporation Tax is charged. There are additional late filing penalties after 12 months and if your tax return is late 3 times in a row. To find out more click here.
Whilst there are no automatic late payment penalties, HMRC will apply interest to the overdue tax liability.
Personal Tax returns
Self Assessment Tax Returns that are filed up to three months late will get an automatic £100 penalty. Further late filing penalties are applied after three months at a cost of £10 per day for up to 90 days.
After six months, additional penalties are applied based on the amount of tax that is owed. HMRC have a calculator to estimate this.
Don’t forget, the 31st January deadline only applies to online tax return. Paper returns need to be with HMRC by 31st October following the tax year.
Penalties are applied to late payments of 5% of tax owed 30 days, 6 months and 12 months after the payment date. These apply to the balancing payment, the first payment on account and the second payment on account.
How to pay your tax returns
Corporation Tax
You can pay Corporation Tax online, through telephone banking or using a debit or corporate credit card. Details of how to make payment can be found here.
You will need the Corporation Tax reference number for the company’s accounting period so that HM Revenue and Customs allocate the payment to the right year.
Personal Tax
Personal Tax can be paid by Direct Debit, Online banking, Telephone Banking, Debit or Corporate Credit Card. It can also be paid weekly or monthly through a budget payment plan. Details of how to pay your tax bill can be found here.
Personal Tax can also be collected through your PAYE tax code if you owe less than £3,000, pay tax through PAYE, have submitted a paper tax return by 31st October or an online tax return by 31st December.
Setting money aside to pay taxes
To avoid the shock of a large tax bill we recommend keeping track of your profits and estimating your tax throughout the company’s financial year. Clients that use Xero can generate a report with a rough estimate of what needs to be put aside.
For a more accurate figure, Corporation Tax can be calculated with interim management accounts. If quarterly accounts are prepared, paying quarterly into a savings account can ensure funds are set aside to meet Corporation Tax bills.
HMRC also offer a budget payment plan to pay Self assessment tax on account. You will have to top up the difference if your tax bill is not fully paid by 31 January following the end of the tax year.
All HMRC filing deadlines you need to know
Self Assessment Tax return deadlines
If you file your tax return online, the deadline is 31 January following the end of the UK tax year. If you complete a paper tax return this needs to be filed by 31 October following the end of the tax year.
Self Assessment payments need to be made by 31 January and 31 July (where payments on account apply).
As well as Personal Tax, these payments include class 2 and 4 National Insurance Contributions and Capital Gains Tax.
Corporation Tax deadlines
A Limited Company Tax Return is due within 12 months of the end of the accounting period. The deadline for Corporation Tax is 9 months and 1 day after the end of the company’s financial year.
Large companies can also be required to make payments on account depending on their profits and number of associated companies.
There are also Companies House deadlines that a company must meet:
- Annual accounts need to be filed within 9 months of the end of the accounting period
- A confirmation statement also needs to be delivered to companies house every 12 months, the deadline for this 54 weeks after the last confirmation statement was submitted.
VAT payment deadlines
Where VAT is paid by direct debit this is taken one month and 10 days after the end of the return period. All other payments are due one month and 7 days after the end of the return period.
You must also file online your VAT return within one month and 7 days of the end of the return period.
Pay your taxes on time with Spotlight Accounting
Our Personal Tax , Annual Accounts Preparation Service and Corporation Tax Service helps ensure that your accounts and online returns are filed on time and HM Revenue and Customs deadlines are met.
We also like to work with clients to make sure that they are operating in the most tax efficient way and maximising the value that they take out of their business.
If you like the sound of what we do then contact us to see how we can help you and your business.
FAQs
Are the MTD deadlines the same as paper return?
No, for Self Assessment, paper returns have a 31 October deadline following the end of the tax year. Whereas if you file your return online, there is an extra 3 months to the 31 January filing deadline.
Is it better to pay tax returns on time or early?
This depends on your cash flow. If there is not sufficient funds in the business to pay tax early then it is best not to.
You can also set up a budget payment plan for Self Assessment if you would rather save throughout the year.
How long does it take to get a tax refund?
A tax refund can take between 5 days and 5 weeks depending on the complexity. If the refund is due to CIS deduction or you are claiming R&D Tax Credits, then this can take even longer.
What if I can not pay my tax on time?
We always recommend that you notify HMRC and look to put a time to pay arrangement in place.
If you are consistently struggling with tax unpaid then we would recommend looking at putting a forecast together to see how you can get straight with HMRC.
Learn more about how tax can affect your business here:
