Penalties for late self-assessment returns waived for a month

HMRC is offering self-assessment taxpayers extra time to submit their 2020-21 tax returns and pay any tax due, but farmers are being urged to file and pay on time if they can.

The department is waiving its late filing and payment penalties for self-assessment taxpayers for one month, in recognition of the current difficulties that they or their accountants may be encountering due to Covid-19.

The deadline to file and pay remains 31 January, but a penalty waiver will apply for those unable to file a return by that date, as long as they file online by 28 February.

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Normally, a £100 late filing charge would be imposed for returns filed after 31 January.

Anyone who is unable to pay their tax bill by 31 January will also not receive a late payment penalty provided they pay in full, or set up a Time to Pay arrangement, by 1 April.

However, 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 2022.

The Time to Pay service allows individuals or businesses to spread their tax payments over time.

Self-assessment taxpayers with up to £30,000 of tax debt, who have filed their latest return and are within 60 days of the payment deadline, can apply to make their own Time to Pay arrangement online, as long as they plan to pay off the debt within 12 months.

Those wishing to use the service but not meeting these criteria should speak to the self-assessment helpline.

Interest still payable

Martyn Dobinson, a partner with accountant Saffery Champness, said the announcement was welcome and would come as a relief to those who were genuinely under pressure.

“However, it should be noted that interest will still be payable on late payments from 1 February, so if at all possible, tax payments should still be made on time, even if any payment is based on a draft return or estimate of the liability,” he said.

Interest will be charged at 2.75% on late payments.

Support grants

Mr Dobinson advised taxpayers that when completing their returns they should remember to include any additional Covid-19 support grants or payments they have received up to 5 April 2021, as these are taxable.

This will include Self-Employed Income Support Scheme receipts and Coronavirus Job Retention Scheme receipts, or any other payments such as self-isolation payments or local authority Covid support grants.

Fraud warning

HMRC is also urging taxpayers to be on the alert if they are contacted out of the blue by someone asking for money or personal information.

It has seen high numbers of fraudsters emailing, calling or texting people claiming to be from the department.

Taxpayers are advised they should always type in the full online address www.gov.uk/hmrc rather than clicking a link, to get the correct site for filing their self-assessment return securely and free of charge.