To many taxpayers, it must seem like the ongoing effects of the pandemic are an endless nightmare of tax deadlines, after the endless nightmare of lockdowns.
So when the deadline for Self-Assessment payment was extended by a month, to 28 February, it was a huge relief for the self-employed, not to mention their hard-pressed accountants facing one of the busiest times of the years. Known as ‘tax season,’ January to April is the time of year when accountants are at their busiest.
To further ease the pain, HM Revenue and Customs (HMRC) has also postponed late-payment penalties until 1 April, in recognition of the extraordinary circumstances surrounding the pandemic.
Avoid a late filing penalty
More than 12.2 million its customers were expected to complete a tax return for the 2020 to 2021 tax year. More than 10.2 million taxpayers filed by 31 January 2022 deadline, HMRC has revealed.
The remaining 2.3 million now have until 28 February 2022 to submit their late tax return and avoid a late filing penalty.
However, the sting in the tail is that taxpayers who avoid a fine by paying by 28 February, face interest charges on what they should have paid.
HMRC says for any Self-Assessment customer who is yet to pay their tax bill or set up a payment plan, interest will be applied to outstanding balances from 1 February.
Customers have until 1 April to pay their tax in full, or set up a time to pay arrangement, to avoid a late payment penalty.
Surcharge may be added
Anything left to pay between 31 January and the 28 February will attract daily interest at 2.75 per cent. If the tax still isn’t paid in full by the 1 April, a five per cent surcharge could be added.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said she would like to than the millions of customers and agents who sent their tax return and paid by the 31 January deadline.
She added: “We’re waiving penalties this year, to give those who missed the deadline an extra month. And customers can set up a monthly payment plan online if they’re worried about paying their tax bill.”
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest. Self-employed people can use the calculator on GOV.UK to help estimate their tax bill.
Those who are unable to pay should immediately seek advice from their accountant.
There are options available at HMRC’s Time to Pay, essentially allowing payments to be made in instalments.
For help and advice on related matters please contact our expert team.