Martin Lewis shares quick hack to reduce tax bill due to be paid by next week

Linda Howard
·3-min read

Martin Lewis has shared a clever way millions of people due to file their Self Assessment return before the deadline on January 31 can save money on their tax bill, if they are unable to pay the full amount. On the latest Martin Lewis Money Show Live, the consumer champion revealed that nearly 4 million people have still to file their tax return for the 2023/24 financial year, according to the latest data from HM Revenue and Customs (HMRC).

The financial guru warned that people who fail to file on time face an initial late-fee charge of £100, then have to pay interest on any money they owe - but there is a way round it. Martin explained that if you file it as soon as possible and pay what you think you owe then the interest will only be charged on the difference.

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Martin told ITV viewers: “I spoke to HMRC today there were 5.4 million people who haven’t done it at the beginning of the month and there are still 3.8 million people who need to do it, who haven’t done it - that is a lot of people, so do not delay it. The phone lines get busier, it gets tougher, it gets more difficult if you have a problem, if you have a Self Assessment tax return to do, get it done - it’ll make your life easier .”

Martin also warned: “if you miss the deadline, the fine is 100 plus possible penalties later on at an interest of 7.25 per cent if you don’t pay.

“I’m not sure HMRC likes me saying this, but I’m going to say it anyway. The best thing is get your form in and do it properly, but if you’re gonna struggle to get the form done and you got a rough idea of how much tax you should pay, then pay what you think you owe now.”

Martin then gave an example of how if someone pays £10,000 before January 31, but their actual bill is £11,000 then they would only be charged interest on the difference, so 7.25 per cent of £1,000.

He also emphasised that anyone struggling to pay their tax bill should speak to HMRC urgently.

Who needs to file a Self Assessment?

Taxpayers may need to complete a tax return, even if they pay taxes through PAYE, for example, if they:

  • are self-employed and have earned gross income over £1,000

  • are self-employed and earned up to £1,000 and wish to pay Class 2 NICs voluntarily to protect their entitlement to State Pension and certain benefits

  • are a partner in a business partnership

  • had a total taxable income of more than £150,000

  • have received any untaxed income including pension income over £2,500

  • received income over £1,000 from trading or providing services online

  • have to pay the High Income Child Benefit charge

  • received interest from banks and building societies or investments (more than £10,000)

  • received rental or letting income from UK land and property

If someone regularly sells goods or provides services through an online platform, they may need to pay tax on their income.

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

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 per cent 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.

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