The Chancellor has announced that from 6 April 2016 there will no longer be a notional tax credit associated with dividends received and the following rates will apply after a £5,000 tax free dividend allowance:
Basic rate taxpayers – 7 ½%
Higher rate taxpayers – 32 ½%
Additional rate taxpayers – 38.1%
This will mean that from 2016/17 individuals will be able to receive up to £17,000 tax free:
Personal allowance £11,000
Tax free interest £1,000
Tax free dividends £5,000
… is not a reasonable excuse!
However, it has been announced that HMRC will not contest appeals against the £100 late filing penalty in respect of 2013/14 tax returns where the taxpayer provided a reasonable excuse for not filing on time.
In the past, HMRC has looked in detail to judge if each excuse is reasonable but will now reallocate resources onto tax evasion and avoidance.
What counts as a reasonable excuse is normally something unexpected or outside your control that stopped you meeting a tax obligation, for example:
- Death of your partner shortly before the deadline
- An unexpected stay in hospital
- Your computer or software failed just before or while you were preparing your return online
- HMRC online service issues
- Postal delays that couldn’t be predicted
Although the latest announcement concerns late self-assessment tax returns, the above list of excuses applies generally to other returns and payments such as VAT, PAYE and those due under the Construction Industry Scheme.