During last year’s tax season the Telegraph estimated that some three million people were due to face a £100 penalty for filing their taxes late. The article went on to state that the HMRC estimated that 10 percent of taxpayers fail to pay by the deadline. The £100 penalty was introduced during the 2012 tax season and will continue to be in effect this year. If you find yourself facing a £100 or greater penalty this year or if you have to file your taxes late, consider these five tips for last minute tax filing:
Know the Penalties
If you find yourself having to file your taxes late, be sure you are aware of how much doing so will cost you. We’ve already mentioned the £100 penalty that you’ll have to pay, but unfortunately, this isn’t the only late tax penalty you may face. In fact, you may find that filing late could cost you £1, 600 in fines. If you leave your taxes unfiled for three months, you’ll owe £10 a day up to a maximum amount of £900. After six months of unfiled taxes, a further £300 could be totted on to your total. After 12 months, you could see your owed tax bill rise by another £300. The moral of the story is: the longer you leave it to file your taxes, the more you pay.
Do it Online
More and more people are using the internet when filing their taxes because it’s quicker and much easier to use than traditional methods. If you have to file your taxes late, you’ll definitely want to consider the speed and efficiency of filing your taxes online. You’ll also want to consider the flexibility doing it online affords you.
Apply for an Extension
If you know you won’t be able to make the tax deadline, you could apply for a tax extension. Please note that applying for an extension will not exonerate you from meeting the tax payment deadline. You will still have to pay the estimate amount of taxes you owe by the due date. If you fail to make this payment, it could result in the penalties discussed earlier.
Plan your Capital Gains
You should double check your capital gains to see if you eligible for an exemption. The Telegraph reports that most people in the UK are eligible for a capital gains tax exemption of a certain amount each year, normally around £10,600. Because capital gains taxes can be a bit tricky, it is advised to speak with a financial adviser about your eligibility and your options surrounding capital gains tax.
Prepare for Next Year
It may be too late to save any money on your taxes this year, but you could get a jump on next year’s taxes now. Three of the best ways to pay less taxes are to: open up a tax-free ISA or a tax-free junior ISA. Saving your money in an ISA makes economic sense as it will continue to grow over time and when you withdraw, you will not have to pay taxes on the amount withdrawn from the ISA. The third way to ensure you pay fewer taxes in the future is by paying into a pension fund. Paying into a pension fund should help to boost your retirement fund.
