Self-Assessment taxpayers usually have until 31 January to file their tax return or face a late filing penalty. This year, HMRC has just announced that taxpayers will not face this penalty provided they file their return by 28 February 2021.

It is important to note, that taxpayers are still required to pay their tax bill by the 31 January 2021 deadline and that interest will be charged on any outstanding liabilities from 1 February 2021.

Time to Pay arrangements

Taxpayers who are unable to pay their tax bill by 31 Jan 2021 can apply to spread their bill over up to 12 months, but before setting up a “time to pay arrangement”, your 2019/2020 online tax return must have been filed. HMRC is hoping that allowing people to file their online returns up to 28 February, without incurring the late filing penalty, will help people to access the Time To Pay arrangements. Once the 2019/20 online return has been submitted, taxpayers can set up an online payment plan to spread self-assessment bills of up to £30,000 over up to 12 monthly instalments. Remember interest will be applied to any outstanding balances from 1 Feb 2021.

It is also worth noting, that if you make payments on account, and you know that your 2020/21 tax bill will be lower than for 2019/20 due to Covid related loss of earnings for example, you can apply to HMRC to reduce those payments on account.

Kay Brookes, Partner at Bates Weston comments

“ It is encouraging that HMRC has recognised the difficulties Covid has caused some taxpayers in preparing their Self-Assessment returns and the difficulties they may have in meeting their tax bills. Removing the late filing penalty until 28 February is welcome news, and hopefully it will allow taxpayers some breathing space in which to access the online Time To Pay service and set up more manageable monthly payments.”

Kay adds,

“ If you need our help in considering a Time to Pay arrangement do get in touch with us. It is important to act quickly, as Time to Pay arrangements have to be set up through your personal Government Gateway, and if you have always used an agent for this, it can take several working days to enable your personal access.”

If you need our help, please do get in touch.