Self-assessment penalty waived for February filings

25th January 2021

Self Assessment taxpayers who cannot file their tax return by 31 January 2021 will not receive a £100 late filing penalty as long as they file online by 28 February, HMRC has confirmed.

After months of pressure from professional bodies and business groups on HMRC to move the normal 31 January tax return filing deadline because of Covid, the department has now relented, at least in part.

HMRC Chief Eexecutive, Jim Harra, has confirmed that taxpayers will not be charged a late filing penalty as long as they file online by 28 February.  Paper filings will not benefit.

HMRC has also confirmed that the relaxation from the penalty will apply to forms SA700 (Non-resident Company) and SA970 (Trustees of Registered Pension Schemes) filed in February. These have to be filed on paper as their is no online alternative. Their paper deadline is 31 January.

In addition, as long as they are filed online, the penalty relaxation will also apply to forms SA800 (Partnership Tax Return) and SA900 (Trust and Estate Tax Return). However, the paper deadline for these returns was 31 October 2020, and so if they are filed on paper in February they will not benefit from the relaxation.

According to the department, more than 8.9 million taxpayers have already filed their tax return, and HMRC continues to encourage people who have yet to file to do so by 31 January, if possible.

HMRC has emphasised that taxpayers are still obliged to pay their bill by 31 January, and interest will be charged from 1 February on any outstanding liabilities.

The department has also made clear that a 5% late payment penalty will be charged on any 2019/20 tax which is not paid, or there isn't a time to pay arrangement in place, on or before 2 March 2021

More information on how to pay can be found in how to pay is at GOV.UK.

Spreading your tax bill

Those who cannot afford to pay their tax bill on time can apply online to spread their bill over up to 12 months.

But they will need to file their 2019-2020 tax return before setting up a time to pay arrangement, so HMRC is encouraging everyone to do this as soon as possible.

Since 1 October 2020 the enhanced Time to Pay service can be used where a tax bill is between £32 and £30,000 provided the taxpayer has no other existing tax debts or payment plans already set up, tax returns are up to date and it is no more than 60 days since the tax was due for payment.

The online payment plan service can already be used to set up instalment arrangements for paying tax liabilities up to £10,000, but this has now increased to £30,000 for Self Assessment taxpayers, to help ease the financial impact of the coronavirus pandemic.

More than 25,000 taxpayers have already used the service, according to HMRC.

Reducing 2020-2021 payments on account.

Payments on Account are based on the previous year’s tax bill.

If your financial situation has been impacted by coronavirus, you may have a reduced tax liability arising for the 2020-2021 tax year, so you may want to reduce your 2020-2021 payments on account.

Should you have any queries, please contact your Bishop Fleming advisor.

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