The significance of 30 September for tax and tax credits

Published on 12 September 2005

For income tax self-assessors, 30 September is an important date, but not a deadline as such. For tax credits claimants, it is a deadline not to be missed. In this article we look at what it is useful to have done, and what must be done, by that date.

Tax

For income tax self-assessment, 30 September is a significant date but not, as is often assumed, a deadline of any sort. There is nothing which a self-assessment taxpayer has to do by 30 September. The deadline for filing 2004-05 self-assessment returns is 31 January 2006.

So why is 30 September bandied about in the media and financial press? Because HMRC guarantee that if you file your 2004-05 self-assessment return on paper by that date, they will calculate your tax bill in good time so that you know what you must pay by 31 January 2006, which is the due date for payment. They also guarantee to collect through your PAYE coding in a future year any amounts you owe for 2004-05 up to £2,000.

If you file electronically, the equivalent date is much later - 30 December.

If you file on paper, and do not manage to do so by 30 September, HMRC will still calculate your tax. The difference is that they cannot guarantee to tell you what it is in time for you to pay on 31 January. Similarly, they cannot guarantee that if your tax is £2000 or less and you want it coded out, that they will still be able to do so if you don't file until after the end of September.

It is a good idea to file early anyway, so as to leave enough time to correct any mistakes that might arise.

Self-assessment filing is discussed in detail on our website here.

Tax credits

For tax credits, 30 September is the date by which claimants must return their renewal papers. Go to here for an account of the renewals process in tax credits.

It is important that by 30 September everybody who has received tax credits in 2004-05, and who is required to complete their annual declaration, should have done so. The only people to whom this does not apply are those who received no more than the family element of child tax credit, or who were on nil awards, and whose circumstances have not changed so as to alter their entitlement in any way.

Even if you do not wish to renew your tax credits claim for 2005-06, you must complete and return your annual declaration with details of your income for 2004-05. This is so that HMRC can compare your income for that year with the income for the previous year, 2003-04, on which your 2004-05 award was initially based, and thus work out your final entitlement for 2004-05.

If you do not yet know your income for 2004-05 - for example, you are self-employed and your business profits have not yet been computed - it is sufficient if you give an estimate of your income for that year on your annual declaration. If you take that option, remember to confirm the estimate, or give HMRC the correct figure by 31 January 2006.

Last year, HMRC allowed a few week's grace around 30 September for tax credits claimants. They could do the same this year if they so chose - but it would be very unwise to rely on it. The only safe course is to ensure that renewal papers are returned by the end of this month.

What happens if you miss the deadline? Basically, your entitlement for 2005-06 is brought to an end, and all the payments you have received since 6 April 2005 become repayable. If you miss the 30 September deadline, but can show 'good cause' for missing it, and file the requisite information by 31 January 2006, HMRC might agree to reinstate your award and backdate it to 6 April 2005. Otherwise, you will have to make a new claim which can only be backdated by three months at the outside, and all tax credits you received during the first part of 2004-05 will be repayable.

Contact Name: Robin Williamson (Tel: 0844 579 6700; Fax: 0844 579 6701)

(12-09-2005)