Those who are self-employed or have their own businesses and have not yet filed their tax return can breathe a sigh of relief, as HM Revenues and Customs (HMRC) has announced it is extending the deadline until the end of February.
The original date the documents needed to be sent in, paid or a payment plan set up was January 31st, but the government has decided to give people more leeway this year, as many are facing financial challenges.
Consequently, taxpayers will not receive a late penalty if they submit their return by February 28th. What’s more, those who did not manage to pay their taxes by the end of last month will be exempt from a late payment charge if they clear their balance by April 1st or, at least, set up a payment plan by then. This will save them the usual £100 fee for paying up to three months late.
Director general for customer services at HMRC Myrtle Lloyd said: “We understand some customers might be worrying about paying their self assessment bill this year, and we want to support them.”
As well as extending the deadline, HMRC introduced online payment plans in April 2021, so taxpayers can divide the levy they owe into smaller instalments, making it easier for them to pay than one large sum.
After filing their tax return, they are then given the choice to set up a Time to Pay arrangement for a whole year on taxes worth up to £30,000.
The government believes this could assist up to 100,000 people who fill out self-assessment forms every year. However, if someone owes more than £30,000 or needs a longer timeframe to pay, they can discuss other payment options directly with HMRC by calling the Self-Assessment Payment Helpline.
Those who are yet to submit their 2020-21 tax return should remember to include earnings during lockdowns. Therefore, if any Covid-19 financial support schemes were utilised, including the self-employment income support scheme, coronavirus job retention scheme, self-isolation payments, local authority grants and any others, this needs to be declared.
It is also worth submitting the tax return at the earliest opportunity as all outstanding amounts have been subject to interest from the beginning of the month. The late payment interest rate is currently 2.75 per cent. However, there will be a late payment penalty of five per cent if taxes are not paid or a payment plan not been set up by midnight on April 1st 2022.
Those who are not sure whether they need to submit their self-assessment tax return should double check to avoid having to pay a late payment charge without knowing. Someone has to file their financial documents if they are self-employed and made over £1,000 in the last tax year; has claimed expenses that exceed £2,500; has received £2,500 or more in untaxed income, including bonuses, commissions or tips; has earned over £100,000 a year; has earned income outside of the UK; has received Child Benefit while earning more than £50,000; or has earned more than £2,500 from renting out a property.
For help with your tax return, consider using an online accountment for self-assessment.