Millions of UK households have until midnight to avoid £100 fine through post

Millions of UK households have just one day left to avoid getting a £100 fine through the post. Time is quickly running out for millions of people to file their tax returns before the deadline on January 31, HMRC has warned.

Those without a reasonable excuse for missing the deadline will be issued with a penalty that increases the longer is it outstanding. If the midnight deadline is missed, an initial £100 fixed penalty is issued, which applies even if there is no tax to pay.

After three months of not paying tax due, additional daily penalties of £10 per day are applied, up to a maximum of £900, with further penalties at six months and a year, including added interest on top. "Customers' reasons for not paying their tax bill or arranging a payment plan by the deadline will be considered individually," said Myrtle Lloyd, HMRC's customer services director.

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Alastair Douglas, CEO of TotallyMoney, said: "It's important to get your tax return filed as soon as possible - and even if there's nothing to pay. That's because the taxman will be waiting to dish out £100 fines as soon as the clock strikes midnight.

"After that, you'll have three months of breathing space before HMRC issues daily penalties of £10, up to a maximum of £900, with fines getting more severe after that." The deadline affects anyone self-employed or part of a business partnership with last year's pre-tax earnings exceeding £1,000, specifically for the tax year spanning from April 6, 2023, to April 5, 2024.

"Tax generally can be quite an intimidating topic," accountant Benedicta Egbeme, founder of BeniRatio Finances, told the BBC, adding that even though the UK tax system is "complex and daunting," people should not "bury their head in the sand" because of the fear from not engaging with the system.

"If you know you are liable to complete the return and have no 'reasonable excuse' and you also have a rough idea of how much you may need to pay - this may be based on previous years returns - you can choose to make a payment for tax even without submitting to avoid the interest charge."

"You can then proceed to get your calculations done and make a submission as soon as possible for the correct amount. Of course any shortfall will need to be paid and any over payments will ultimately be refunded to you by HMRC", she said.