Martin Lewis warning as millions need to act 'ASAP' to avoid £100 fine
Martin Lewis has warned Brits who need to file a self assessment tax return need to do so "ASAP" or risk being fined.
In a post on Twitter - formerly X - the MoneySavingExpert.com founder warned that if you miss the deadline for self assessment taxes for the 2022-23 tax year you could face a fine - plus the daily interest on top. Martin noted that currently, HMRC's interest on late payments sit at 7.75%.
This means you'll end up paying a significant amount more than you otherwise would have if you filed your self-assessment on time.
If you are running very far behind in filing your tax return - which is due tomorrow on January 31 - Martin says you should "estimate" how much you owe and pay. This is because you will then only be charged interest on any "underpaid amount" rather than the whole thing.
In the post, Martin said: "Do you do tax self-assessment? If so have you paid your 22/23 tax bill yet? If not do it ASAP. From Thur you pay daily interest on unpaid tax (at 7.75% annual rate). Even if you have not done a tax return consider estimating & paying then ur only charged interest on any underpaid amount."
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If you are late filing your tax return then you face a £100 fine from HMRC. If you have not filed after three months you'll be charged additional fines of £10 a day on top up for 90 days - this means you could face a fine of £900.
If you still haven't filed after six months, you'll face a further fine of 5% of the tax you owe or £300 - whichever is greater. This is then repeated at 12 months. If you do receive a penalty, you can appeal against it. However, you need a valid reason for doing so.
In a follow up post, Martin explained that his warning wasn't to those who had "got it all sorted" and were trying to utilise high savings rates at the moment. With self assessment tax, you pay tax on your earnings in large chunks rather than each month through PAYE.
Depending on how much you make over the course of the tax year, you could end up with a significant pot of cash in your bank account which you owe HMRC in tax. The majority of self employed Brits keep this pot of cash away from their spending income and to make the most of it you can put it into a high interest savings account - this will allow you to potentially make some money on the interest before having to pay it to HMRC.
In the follow up post, Martin said: "Ps of course this isn't for those who've got it all sorted and are waiting to pay last minute to max the interest earned while it's in savings".
However, before doing this you will need to do your research. This is because you will need to find the best suited savings account for this hack, as some accounts require you to keep your cash in the accounts for set periods such as 12 months. You will also need to find an account which will not penalise your interest rate for withdrawing money.
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