The time limits for the submission of information, claims and payment of tax, including payments on account

Welcome to the HMRC Calendar: Filing and Paying Your Taxes

Hello there! Welcome to one of the most practical parts of your Taxation (TX) studies. Think of this chapter as the "HMRC Calendar." Just like you have deadlines for assignments or bills, the UK tax system has very specific dates for when you must tell HMRC what you earned and when you must pay them.

Understanding these dates is crucial because missing them leads to penalties (fines) and interest. Don't worry if it seems like a lot of dates at first—we will break them down into simple patterns that are easy to remember!

1. Submitting the Tax Return (The "Paper vs. Online" Rule)

In the UK, the tax year runs from 6 April to 5 April the following year. Once the year ends, you need to tell HMRC about your income via a Self-Assessment Tax Return.

There are two ways to file, and the deadline depends on which one you choose:

• Paper Returns: Must be submitted by 31 October following the end of the tax year.
• Electronic (Online) Returns: Must be submitted by 31 January following the end of the tax year.

Example: For the tax year 2023/24 (ending 5 April 2024):
- If you post a paper form, it must reach HMRC by 31 October 2024.
- If you file online, you have until 31 January 2025.

Quick Tip: Most people file online because it gives them three extra months to get their paperwork ready!

Key Takeaway:

31 October for paper; 31 January for online. Always remember the tax year ends in April, and the deadlines are in the following Autumn/Winter.

2. Payments on Account: The "Installment Plan"

HMRC doesn't always like to wait until the end of the year to get their money. For many taxpayers, they require Payments on Account (PoA). Think of this like a "pay-as-you-go" system or a subscription service where you pay in advance based on what you owed last year.

When do you NOT have to make Payments on Account?

You don't have to worry about this "installment plan" if:
1. Your tax bill for the previous year was less than £1,000.
2. Or, you have already paid more than 80% of your tax through your job (PAYE).

The Deadlines for PoA

If you do meet the criteria, you must make two equal payments based on the previous year’s total tax liability:

• 1st Payment: 31 January (during the tax year).
• 2nd Payment: 31 July (after the tax year ends).

The Formula:
\( \text{Each PoA} = 50\% \times (\text{Previous year's Income Tax and Class 4 NIC liability}) \)

Analogy: Imagine you owed £2,000 in tax last year. HMRC assumes you'll owe the same this year. They ask for £1,000 in January and £1,000 in July.

Common Mistake to Avoid:

Students often forget that Capital Gains Tax (CGT) is NOT included in the calculation for Payments on Account. PoA only relates to Income Tax and Class 4 National Insurance.

3. The Balancing Payment

Since the Payments on Account are just "best guesses" based on last year, they usually don't match your actual tax bill perfectly. The Balancing Payment is the final amount you pay to "settle the score."

Deadline: 31 January following the tax year (the same day the online return is due).

Step-by-Step Calculation:
1. Calculate your total tax for the year.
2. Subtract the 1st Payment on Account (made Jan).
3. Subtract the 2nd Payment on Account (made July).
4. The remaining amount is your Balancing Payment.

Note: If you paid too much in your installments, you will get a refund at this stage!

Quick Review: The Three Big Payment Dates

For the tax year 2023/24:
1. 31 January 2024: 1st Payment on Account.
2. 31 July 2024: 2nd Payment on Account.
3. 31 January 2025: Balancing Payment (plus any CGT owed).

4. Claims for Relief

Sometimes you might realize you made a mistake or forgot to claim a tax relief (like a business loss). HMRC allows you to make a claim, but there is a time limit.

The General Rule: You usually have four years from the end of the tax year to make a claim for relief or to correct an overpayment.

Example: For the 2023/24 tax year (ending 5 April 2024), you have until 5 April 2028 to make a claim.

5. Keeping Records

HMRC requires you to keep your receipts and records just in case they want to check your math later (this is called an "enquiry").

• Business/Self-Employed: Keep records for 5 years after the 31 January filing deadline.
• Non-Business (Personal): Keep records for 1 year after the 31 January filing deadline.

Did you know? Even if you don't have a business, it’s always safer to keep your bank statements and P60s for a few years just in case!

Summary Table for Easy Revision

Encouragement: You’re doing great! This chapter is all about getting comfortable with the cycle of the tax year. Once you memorize the 31 January and 31 July dates, everything else falls into place!