- Developing issues like bitcoin, the gig economy, and how people pay HMRC are will have an impact on this self-assessment this year
- Emily Coltman FCA and Chief Accountant to FreeAgent outlines her five top tips for late filers
Nearly 11 million people are expected to file a self-assessment tax return before next Wednesday’s (31/01/18) deadline. Yet last year 14% of taxpayers (or 840,000 people) missed this deadline and incurred a fine of £100 from HMRC.
However, this year’s self-assessment deadline is significant for a number of reasons.
Those submitting self-assessment tax returns need to be aware of:
- Bitcoin: In April 2017, a single Bitcoin was worth a little over £746 but by mid-December, it was worth over £14,000. However, HMRC’s guidelines on the crypto-currency may cause confusion among non-traditional investors looking to include the information in their Self Assessment tax return.
- Gig economy: With the average Airbnb host making at least £3,000 per year, these individuals need to assess whether they meet HMRC’s “badges of trade”, they will need to register for Self Assessment as soon as possible, or else receive a £100 fine from HMRC, and risk further penalties for not paying the tax they owe.
- Paying HMRC: While submitting a self-assessment tax return is free, due to new EU rules (the Payment Services Directive 2 – PSD2), HMRC will no longer accept credit card payments for late payers.
Ed Molyneux, CEO and co-founder of award-winning cloud accounting software provider FreeAgent, said: “Every year, hundreds of thousands of people across the UK end up incurring fines for failing to file their tax return on time. Yet, in many cases, these penalties are entirely avoidable provided that people check the tax implications of what they have earned throughout the year and start their Self Assessment in advance of the filing deadline.”
“Airbnb rents and other earnings from the gig economy can often trip people up when it comes to knowing whether they have to file a tax return. But this year, an added complication could come from Bitcoin, as some investors in the crypto-currency will have taken advantage of its high valuation this year to cash out their investments.”
“It’s likely that HMRC see Bitcoin profits being subject to Capital Gains Tax, but there does not appear to be a definitive answer on the issue yet, which could cause confusion among investors. I would therefore urge anyone who has made money from Bitcoin to contact HMRC directly to check whether they need to include the information in their Self Assessment tax