Millions of taxpayers are facing a significant hurdle as they rush to meet the self-assessment deadline, with experts warning a recent mid-year tax change could lead to widespread underpayments.
Last-Minute Rush for 12 Million Taxpayers
According to investment platform AJ Bell, HM Revenue and Customs (HMRC) is anticipating more than 12 million people to submit a tax return for the 2024/25 financial year. The deadline for online submissions is 31 January 2026.
Charlene Young, a senior pensions and savings expert at AJ Bell, highlighted the scale of the task remaining. "The festive period is now firmly in the rear-view mirror and millions of people are yet to file their self-assessment tax return," she said. Latest HMRC figures indicate that while nearly 20,000 filed on New Year's Day, just under half of the expected returns are still outstanding.
The Capital Gains Tax 'Trap'
The primary issue stems from a change made partway through the tax year. The main rates for Capital Gains Tax (CGT) increased on 30 October 2024. Basic rate taxpayers now pay 18% (up from 10%) and higher rate taxpayers pay 24% (up from 20%) on gains from assets like shares or investment funds.
This mid-year adjustment creates a major pitfall for those completing their returns without professional help or commercial software. HMRC's own free online tax software cannot process different rates within a single tax year. Instead, it applies the lower, pre-October rates to all gains made across the entire year.
"This means some people risk underreporting and underpaying any tax they owe for 2024/25," warned Ms Young. "Particularly if they rely on HMRC's systems."
How to Ensure You Pay the Correct Tax
Taxpayers must take extra care if they realised any capital gains on or after 30 October 2024. While annual summaries from savings and investment providers help calculate total gains, the split across the tax rate change date is crucial.
To combat the problem, HMRC has developed a dedicated online calculator. This tool works out the necessary adjustment to ensure the correct total tax is declared. AJ Bell advises that the calculated figure should be entered into box 51 of the capital gains tax summary pages of the return.
Furthermore, filers should save the results page from the online calculator and submit it as an attachment with their return. For those using commercial software or an accountant, it is still vital to double-check that the application has been updated to handle the dual rates correctly.
With less than four weeks until the deadline, the warning is clear: millions of last-minute filers must navigate this complex change carefully to avoid an unexpected tax bill for underpayment.
