What Happens If You Have Not Paid Tax For 15 Years In The UK?

If you have not paid your tax for 15 years in the UK, you can expect to be charged with tax evasion and face penalties ranging from a fine of £5,000 and six months in jail to seven years in prison and unlimited fines. 

Examples of deliberate tax evasion include the following:

  • Hiding/misquoting trading revenues or intentionally failing to file tax returns.
  • Importing goods VAT-free while selling them to customers with added VAT. Then deliberately avoiding to report VAT charges to HMRC.
  • Diverting funds from tax breaks to other uses instead of the claimed purpose.
  • False invoices or personal expenditure claims.
  • Non-declaration of imported goods.
  • Assuming the identity of someone else.
  • Undertaking tax evasion schemes.

Penalities charged by the HMRC for tax evasion include the following:

  • If someone is found guilty of income tax evasion, their summary conviction is 6 months in jail or a fine of up to £5,000. The maximum penalty for income tax evasion in the UK is seven years in prison or an unlimited fine.
  • If someone is found to be guilty of VAT Evasion of VAT, the maximum sentence is 6 months in jail or a fine of up to £20,000. In the case of a Crown Court, the penalty can be a maximum of seven years in prison or an unlimited fine.
  • If the case is about cheating the public revenue, the penalty is life in prison or an unlimited fine.
  • If someone is caught providing false documentation to HMRC, they may have to pay a fine of up to £20,000 or face up to 6 months in prison.

While salaried individuals get their income tax deducted from their wages under the PAYE system, self-employed individuals will have to pay taxes on their trading profits through self-assessment. Below are details of tax rates based on income brackets that will be applied to your salaried income: 

  • If your income is between £0 and £12,570, you will pay zero income tax
  • If your income is between £12,571 and £50,270, you will pay a 20% tax
  • If your income is between £50,271 and £150,000, you will pay a 40% tax
  • If your income is over £150,000, you will pay a 45% tax

However, in the case of trading profits being assessed through self-assessment, your income tax rate will apply as follows:

Trading ProfitIncome Tax BandTax To Be Paid
Up to £12,5000%No Income Tax on first £12,500
Between £12,501 and £50,00020%20% Income Tax on your next £37,500 
Between £50,001 and £150,00040%40% on the final £2,000
Over £150,00045%No Income Tax paid at this rate

How Do I Know That I Have To File A Tax Return?

You don’t have to file a tax return if you are a salaried employee as your tax is deducted by your employer before your salary is paid; using the tax code assigned by HMRC. However, you must file a tax return if you fall into any of the below categories:

  • You are self-employed and your income was more than £1,000 
  • You earn through renting out property and your income was more than £2,500 
  • You earned through commission or tips in excess of £2,500 
  • You earn through savings or investments and your income was £10,000 or more 
  • You have sold a property or shares and have earned profits on them (Capital Gains Tax will apply in this case)
  • You are registered as a director of a profit-making organisation 
  • The joint income that you or your partner have earned was in excess of £50,000 and you claim Child Benefit
  • You have earnings from outside the UK 
  • You live abroad but you have earnings in the UK
  • The total amount of your taxable income was over £100,000
  • You are a trustee of a trust or a registered pension scheme
  • The State Pension you received during the tax term was your only source of income and was in excess of your personal allowance
  • HMRC issued you a P800 stating that you didn’t pay enough tax in the previous tax term

Before you start, you must make sure that you have the following documents available with you:

  • your National Insurance number
  • your ten-digit Unique Taxpayer Reference (UTR)
  • your Government Gateway ID
  • details of your untaxed income from the previous tax year (this includes income from rental income, dividends from shares, interest on savings, capital gains)
  • expense details related to self-employment or partnership status (receipts/invoices/bank statements)
  • tax-free/relieved charity contributions
  • P60 or other records with details of your income and paid taxes (if any)
  • pension income and pension contributions
  • redundancy payments or employee benefits

How Can I File A Tax Return?

If you are filing a tax return for the first time, you need to register with the HMRC Government Gateway user ID. You will register differently depending on which of the following classifications:

  • you are a self-employed or a sole trader
  • you are not self-employed
  • you are registering a partner or partnership

Once you have registered, you can choose to file your tax returns by making an online payment or using a printed form SA100. This is your main form. Depending on the classification of your source of income you will also need to fill out either of the following supplementary forms:

  • SA102 for employees or company directors 
  • SA103S or SA103F for self-employed 
  • SA104S or SA104F for business partnerships 
  • SA105 for UK property income 
  • SA106 for foreign income or gains
  • SA108 for capital gains 
  • SA109 for non-UK residents or dual residents

How Much Tax Will You Pay On A Second Job?

The tax that you pay on a second job will depend on a number of factors. However, generally speaking, your second job is usually assigned a BR (Basic Rate) tax code which indicates that there is a 20 per cent tax due on your income.  

Your second job is usually considered to be the one that provides a lower income than the first one and there is no consideration for Personal Allowance since it has already been accounted for. The reason is that the HMRC divides your total income by sources to calculate the amount of tax that is due on your cumulative income.

Since you get Personal Allowance once (it does not apply to each individual source of income), it may be in your own interest to have it applied to your main job and not the second one. However, if someone works two jobs and their cumulative income is less than the Personal Allowance amount of £12,750, they can have it spilt across both incomes. Sometimes a second job may increase your tax bracket which leads to a higher tax deduction on your income with an insignificant impact on your take-home salary.

How Are Tax Identification Numbers Used In The UK?

Tax identification numbers are used to track and monitor the tax accounts of individuals. Although the term TIN Number is not specifically used in the UK in its strictest sense, the HMRC issues two TIN-like numbers to members of the public. The purpose and use of these are described below:

  • The Unique Tax Payer Reference (UTR): This is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. You will find this number on the front page of the tax return (form SA100 or CT600). In addition to this, you will find it on a “Notice to complete Tax Return” (form SA316 or CT603) or a Statement of Account. It is also printed next to the headings of “Tax Reference”, “UTR” or “Official Use”; but the appearance and terms that are used will depend on the type of document issued. 
  • The National Insurance Number (NINO): This includes two letters which are followed by six numbers and then only one of the letters between A, B, C and D. Individuals residing in the UK will be issued a NINO once they are 16 years of age. They will be informed by the Department for Work and Pensions (DWP) or the HMRC. If you are an employee, you will find this number on your payslip as well as on a Statement of Account issued by HMRC. It links individuals to their records of national insurance contributions, tax payments, student loans as well as social security benefits.

Which Incomes Are Tax-Free?

Incomes derived from any of the following sources are considered to be tax-free in the UK:

  • Transport costs of an employee’s (and their immediate family) relocation for work in the UK
  • Winnings from games, pool betting, lotteries or competitions with prizes
  • Long service employee awards (certain limitations apply)
  • Individual savings account amounting to £20,000
  • Incomes such as interest or dividends arising from savings accounts 
  • Pensions paid to war widows and dependents
  • Social security and state benefits include maternity allowance, employment and support allowance, attendance allowance, child tax credit and housing benefit. 

Conclusion:

This blog post makes it clear that if you have not paid your taxes in a long time such as 15 years, you can be penalised with a hefty fine or even face a jail term. While you may not have to be as conscious of filing a tax return independently if you are a salaried employee as income tax would be deducted from your wages under the PAYE system, as a self-employed individual, you are required to file your tax returns before the end of a tax year.

FAQs: What Happens If You Have Not Paid Tax For 15 Years In The UK?

What happens if you don’t pay taxes for several years in the UK?

If you don’t pay taxes for several years, the penalty on your unpaid taxes starts from the sixth month onwards and will keep increasing with time. In addition to a hefty amount of monetary fine charged in such cases, individuals have also been known to have served jail terms for tax evasion.

What do I do if I haven’t paid my taxes in years in the UK?

If you haven’t paid your taxes for a number of years, you apply to file your tax returns through self-assessment. Using this system, you can pay back taxes as far back as 4 years. If the duration of your unpaid taxes is more than this, you will need to seek advice from a professional.

How many years back can HMRC go?

Once an enquiry has started, HMRC can go back up to 4 years while conducting a tax-related investigation.

Can you go to jail for not paying tax in the UK?

Yes, in addition to being charged with a hefty fine, you can also be sent to jail for up to seven years if you have not paid your tax in the UK.

Can I get away with not paying taxes?

No, you cannot get away with not paying taxes as it is illegal to do so. Your finances can be tracked by the authorities and once gather evidence through an enquiry, not only will you have to pay the due tax amounts but will also be charged with a penalty ranging from £5,000 to £20,000.

References:

What are the penalties for tax evasion (UK)?.

What Happens If You Don T Pay Tax Uk? – ictsd.org

Dealing with income tax arrears – Citizens Advice

https://www.gov.uk/guidance/what-will-happen-if-you-do-not-pay-your-tax-bill

Do I have to complete a tax return?.

I don’t know if I need to complete a Tax Return.

Self Assessment tax returns: Who must send a tax return – GOV.UK

How to fill in a Self Assessment tax return

P60 tax refund examples – what do you need to know?

Estimate your Income Tax for the current year – GOV.UK

Employment status: Self-employed and contractor – GOV.UK

Freelancing On The Side: What Tax Do I Pay? | Crunch

Second job tax and pay | MoneyHelper

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