HMRC has announced that it will waive its usual penalties for late Self-Assessment filing and payments for a month. This gives taxpayers extra time to complete their 2020 to 2021 tax returns and pay any tax due. The move is a response to the latest COVID-19 wave, which has impacted both businesses and accountants.
Despite this, more than 50% of taxpayers have already submitted their tax returns, ahead of the official deadline of 31 January 2022.
When do you need to file and pay by?
While the deadline to file and pay is still 31 January 2022, the penalty waivers mean that:
- You won’t receive a late filing penalty as long as you file online by 28 February
- You won’t receive a late payment penalty as long as you pay in full or set up a Time to Pay arrangement by 1 April – but you will start paying interest at a rate of 2.75% from 1 February.
A 5% late payment penalty will be charged if tax remains outstanding by midnight on 1 April 2022.
How does a Time to Pay arrangement work?
The Time to Pay service lets individuals or businesses spread tax payments over time. If you have under £30,000 of tax debt you can set this up online after filing your return.
Since 5 April 2021, more than 30,000 taxpayers have used the Time to Pay service, managing tax totalling around £75 million.
Don’t forget to declare COVID-19 support
You must declare any grants or payments you have received from COVID-19 support schemes up to 5 April 2021 on your Self-Assessment, as these are taxable.
- Self-Employment Income Support Scheme
- Coronavirus Job Retention Scheme
- Eat Out to Help Out scheme
Other COVID-19 grants and support payments such as self-isolation payments and local authority grants.
Points to note
You can reduce your Payment on Account if you know your bill is going to be lower than the previous tax year – perhaps due to loss of earnings caused by COVID-19. Find out more about Reducing Payments on Account.
Self-employed taxpayers should ensure their annual Class 2 National Insurance contributions (NICs) are paid on time to make sure their claims are unaffected. Class 2 NICs are included in the 2020 to 2021 Balancing Payment due to be paid by 31 January 2022. Your benefit entitlements may be affected if you:
- can’t pay your Balancing Payment by 31 January 2022
- have set up a Time to Pay arrangement to pay off the Balancing Payment in instalments
33,467 tax returns were filed on New Year’s Eve, and 14,231 on New Year’s Day.
12.2 million tax returns are due by the 2022 deadline. Of these, 6.5 million have already been filed.
Help with your tax returns
We help lots of small businesses by managing their tax returns for them. As small business accountants in Peterborough, we’re here to take the stress out of Self-Assessment, tax returns, accounting payroll services and much more. Contact us on 07855 254978 or 01733 325852 to find out how we can help.