Being in receipt of a pension does not mean the end of income tax!

For older people in the UK who are in receipt of a pension, understanding or getting help to understand the self-assessment tax process is crucial for several reasons. Firstly, accurate tax reporting ensures compliance with legal requirements, avoiding penalties or interest on unpaid taxes. Many pensioners may have multiple income streams, including state pension, private pensions, investments, or part-time work. Properly accounting for these through self-assessment ensures they pay the correct amount of tax and can identify any eligible deductions or allowances, potentially reducing their tax liability. Moreover, understanding this process can help in better financial planning, providing clarity on their net income and helping them manage their budgets more effectively.

Secondly, navigating the self-assessment tax process can be complex, especially for those who may not be familiar with online systems or tax terminology. For older individuals, particularly those with limited access to digital resources or who might experience cognitive decline, seeking assistance is vital. Professional help, such as from tax advisors or accountants, can ensure accurate completion and submission of tax returns. Furthermore, support services from charities or community organisations can provide valuable assistance and peace of mind. Ensuring they receive the correct guidance and support helps mitigate stress and confusion, enabling older pensioners to focus on enjoying their retirement without the burden of tax worries And of course we have a FREE CHECKLIST to aid opening that potentially difficult conversation about getting help with the taxation process.

What is happening right now? January 2025

Almost 25,000 taxpayers ‘celebrated’ the New Year by filing their Self Assessment tax return BUT it’s important to know that anyone who misses the 31 January deadline, could face a penalty.

With less than a month to go, the countdown is on for 5.4 million people who still need to complete and pay their Self Assessment and avoid penalties, HM Revenue and Customs (HMRC) warns.

Thousands of taxpayers have already done so by completing their tax returns before the fizz was barely flat on New Year’s Day. HMRC can today reveal more than 24,800 people filed on 1 January. A further 38,000 had even squeezed theirs in before the bells on 31 December, with 310 filing between 23:00 and 23:59.

Why filing taxes is important

Filing our tax returns and paying on time plays an important role in supporting public services and the government’s Plan for Change, which aims to deliver economic stability and investment across the UK.

Anyone required to file a tax return for the 2023 to 2024 tax year who misses the 31 January 2025 deadline could face an initial late filing penalty of £100.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

We know completing your tax return isn’t the most exciting item on your New Year to-do list, but it’s important to file and pay on time to avoid penalties or being charged interest.

The quickest and easiest way to complete your tax return and pay any tax owed is to use HMRC’s online services – go to GOV.UK and search ‘Self Assessment’ to get started now.

Some 97% of customers now file online and one benefit is that they don’t have to complete it all in one go – they can save what they have done and pick it up again later.  But for older people, acting solely online can be a challenge, so there is other support available. Here are some useful links to get you started.

– Registering for Self-Assessment online by signing in to Government Gateway: HMRC online services: sign in or set up an account: Sign in to HMRC online services – GOV.UK (www.gov.uk)
– Filing your Self-Assessment tax online: File your Self Assessment tax return online – GOV.UK (www.gov.uk)
– Paying your Self-Assessment tax: Pay your Self Assessment tax bill: Overview – GOV.UK (www.gov.uk)
– Checking if you need to pay Self-Assessment tax: Check if you need to send a Self Assessment tax return – GOV.UK (www.gov.uk)

There is ALSO extra support offered by HMRC: Get help from HMRC if you need extra support: Help you can get – GOV.UK (www.gov.uk)

 – Self-Assessment helpline: Self Assessment: general enquiries – GOV.UK (www.gov.uk)
 – Self-Assessment online support helpline: Self Assessment: online technical support – GOV.UK (www.gov.uk)

Once a tax return is filed, payments can also be made quickly and securely through the HMRC app. Customers can set up notifications in the app to remind them when payments are due, so they don’t need to worry about missing deadlines or penalties. Information about the different ways to pay, can be found on GOV.UK.

For people who can’t meet the tax return deadline, HMRC will treat those with reasonable excuses fairly if they tell them before 31 January.

The penalties for late tax returns are:

• an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time
• after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
• after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater
• after 12 months, another 5% or £300 charge, whichever is greater

There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, 6 months and 12 months. If tax remains unpaid after the deadline, interest will also be charged on the amount owed, in addition to the penalties above.

So the message is clear ACT NOW! Even if filing your tax return is a challenge, speaking up is far far better than worrying about it in silence or ignoring the deadlines!