Self-employed individuals owed £1.6bn in late tax payments to HMRC last year, with the figure expected to rise even further once more self-assessment returns for 2017/18 have been submitted, according to accounting firm UHY Hacker Young.
The tax owed by those who have missed the payment deadline has been rising for the last three years. The figure rose 4% to £1.83bn in 2016/17 from £1.76bn in 2015/16 and £1.65bn the year before.
The firm says taxpayers are finding it increasingly difficult to pay their bills on time as the UK economy continues to struggle and individuals are “squeezed”. Most late-paying taxpayers want to pay their bills on time, but some often do not have the available cash to do so.
The rise could also be linked to the rising number of self-employed people in the UK, many of whom are filing self-assessment returns for the first time. There was a record high of 4.93 million self-employed people in the UK in March 2019.
The firm has also found 22% (£516m of £2.35bn) of the outstanding tax was cancelled by HMRC, in comparison with 23% the previous year (£523m of £2.29bn).
Neela Chauhan, partner at UHY Hacker Young, said: “The vast majority of taxpayers are fully intending to pay on time. However, they face a lose-lose scenario when they find it hard to do so.
“They could either choose to pay the full amount on time, risking the long-term health of their business or career because of the hit on their cash flow, or accept a potentially hefty fine further down the line.”
Chauhan added: ”As the number of self-employed people continues to rise, the money owed through late payments is also likely to mount.”