Due to the complexity of the income tax calculation, HMRC have confirmed that they will be unable to accept online filing for certain 2016/17 tax returns.
This is due to computer software issues at HMRC which cannot reflect the interaction between the various tax reliefs applied to savings income.
This issue applies not only to those using HMRC software to file tax returns but also those using commercial software packages. As in some cases, HMRC systems will also be unable to process these correctly.
If these returns are filed on-line they could result in a tax overpayment of as much as £1,000.
To prevent this a paper tax return should be filed. HMRC have confirmed that the deadline for this will be extended to 31 January 2018 rather than 31 October 2017, the usual filing deadline for paper returns.
This issue is likely to arise where taxable income is made up of both savings and non-savings income. There are a number of specific combinations that cause the problem. If you are in receipt of both types of income please check with your tax advisor.
For more information, please contact Lesley Sutton on 01484 550037 or email email@example.com.