HM Revenue & Customs (HMRC) have announced that it has pushed back late filing and payment penalties, meaning that self-assessment taxpayers who are unable to file their tax returns by the 31 January deadline will not be penalised. However, there will be interest on outstanding payments.
It is good news for anyone who is stressing about their tax returns for the 2020/21 financial year, as it gives them an extra month, with the deadline for submissions extended to 28 February. However, HMRC charges a £100 penalty if you miss the self-assessment deadline, even if there is no tax to pay.
Further penalties of £10 a day are applied after three months, with a maximum penalty of £900.
Anyone who isn’t able to pay their tax bill by 31 January will not be penalised, as long as they pay their tax in full or set up a payment plan from 1 April. If you miss the deadline or fail to arrange a payment plan, you could then be charged five per cent of the unpaid tax after 30 days, six months, and 12 months.
However, interest of 2.75 per cent on outstanding payments will start to accrue from 1 February, even though it won’t take effect until the 28 days after the 31 January deadline.
This means that taxpayers may still incur additional charges, even with HMRC granting a little more time to avoid receiving a late filing or payment charge.
You won’t be fined if you set up a ‘Time to Pay’ agreement by 1 April, but interest will still be applied after 1 February.
Self-assessment taxpayers with up to £30,000 of tax debt can set up a “Time to Pay” plan through the GOV.UK website once they have filed their return.
The deadline to register for a self-assessment tax return was technically 5 October 2021, while for filing paper tax returns, the cut-off date was 31 October 2021.
You will be fined if you were to submit a paper tax return now.
Almost six million people still need to submit their tax returns, according to the latest HMRC data.
Angela MacDonald, HMRC deputy chief executive and second permanent secretary, said: “We know the pressures individuals and businesses are again facing this year, due to the impacts of COVID-19.”
She added that HMRC’s decision to waive penalties for four weeks for Self Assessment taxpayers will allow them the extra time they may need to meet their obligations without needing to worry about being penalised.
Lucy Frazer, financial secretary to the Treasury, said that the pressure that people are under due t the pandemic and the omicron variant has been recognised, and the Treasury wants to give millions of taxpayers a little more breading space to get their taxes organised.
“Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.”
If you’re looking for a tax return accountant in Bolton, get in touch today.