AN OVERHAUL of the self-assessment system will make it even more vital to get your tax affairs in order from April.

Accountants warn that the shake-up will mean bigger fines for incorrect returns, although it will also enable you to pay tax bills with your credit cards for the first time. Here we explain what it could mean for you.

Will I face bigger penalties if I make a mistake?

At the moment, you can be fined up to 100% of the unpaid tax for an incorrect return, but discounts for cooperation and disclosure cut fines to nothing for many people.

From April, however, there will be four categories of fine depending on your behaviour. If you make a genuine mistake, there will be no penalty – provided you were not “careless”.

If, however, you “fail to take reasonable care” there could be a 30% penalty. This could include something as simple as not keeping records or not taking advice on something about which you were unsure. Taxpayers could even be fined for a mistake by the Revenue they fail to spot in 30 days.

If the taxman gets in touch before you realise the mistake, but you admit it promptly, the penalty could be halved.

If you deliberately understate your tax, the fine rises to up to 70% and if you also conceal this, the penalty goes up to 100%. There are reductions if you cooperate and act promptly. However, accountants say many who would pay nothing under the current regime would face a fine under the new rules.

What if my accountant was at fault?

One of the biggest changes is that taxpayers could be fined for carelessness even if their accountant made the mistake. However, if the taxpayer can provide evidence that he or she took reasonable care to ensure that the return was accurate, such as checking it before submission, the penalty could be waived.

Will I be able to use my credit card to pay my tax bill?

Yes, if the draft legislation is pushed through. However, there will be a charge. Taxpayers who choose to pay by card will have to pay a fee to cover the cost of handling the payment.

Will there be any change to the tax return deadline?

From April, the deadline for filing paper self-assessment tax returns will be brought forward by three months – from the end of January to the end of October. Those who miss the deadline can expect a £100 fine, plus interest on any tax owed.

Taxpayers who file their returns online will still have until the end of January. The Revenue hopes the changed deadline will encourage more online filing.