Further help for Self-Assessment taxpayers

Shaun Davison
Tax, COVID-19
Shaun Davison, Lovewell Blake Manager

HM Revenue and Customs (HMRC) have announced that Self-Assessment taxpayers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021.

Shaun Davison, Lovewell Blake Manager

Normally, the deadline for Self-Assessment tax payments is 31 January following the end of the tax year, with interest being charged from 1 February on any amounts outstanding. If there is still unpaid tax outstanding 30 days following the payment deadline there is normally a late payment penalty of 5% also charged. With the exception of payments on account for the following tax year, which are excluded from this charge.

This year, because of the impact of COVID-19, HMRC are giving taxpayers additional time to pay or set up a payment plan. This is the first time HMRC has delayed the charging of penalties for payment of Self-Assessment liabilities.

In order to not be charged a large payment penalty, taxpayers must pay their tax bill or set up a monthly payment plan by midnight on 1 April 2021. By using HMRC’s online Time to Pay facility, this will allow taxpayers to spread the cost of their tax bill into monthly instalments until January 2022. There are several ways that you can pay your tax bill including online, via the bank or by post. Wherever possible taxpayers should still pay in full, as this is the only way to stop interest accruing.

Time to Pay allows taxpayers to set up a payment plan online to help them to spread the cost of their tax bill up to £30,000. For someone who’s Self-Assessment debts are more than £30,000, or they need longer to pay, they cannot set up a Time to Pay arrangement online. They may still be able to do so but will need to call the Self-Assessment payment helpline on 0300 200 3822.

More than 97,260 people have already set up a Time to Pay arrangement online, totalling more than £367 million.

This announcement follows last month’s announcement that HMRC will not charge late filing penalties for returns filed online by 28 February. Further information can be found here.

Self-Assessment timetable:

  • 31 January – Self Assessment deadline (paying and filing)
  • 1 February – interest accrues on any outstanding tax bills
  • 28 February – last date to file any late tax returns to avoid a late filing penalty
  • 1 April – last date to pay any outstanding tax or make a Time to Pay arrangement, to avoid a late payment penalty
  • 1 April – last date to set up a self-serve Time to Pay arrangement online

It is important to recognise that there has been no change to the statutory deadlines or taxpayer obligations, therefore, this means:

  • the payment deadline remains 31 January and interest will be charged on late payment. The current rate of late payment interest is 2.6%.
  • a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1 April 2021. Further late payment penalties are charged at 6 and 12 months (August 2021 and February 2022 respectively), on tax outstanding where a payment plan has not been set up.

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