Self-assessment tax return submission given one-month penalty reprieve

If the tax liability is not paid by 31 January, then interest will still accrue from 31 January until the date the tax is paid. The late payment interest rate from 4 January 2022 is 2.75%. 

Normally a 5% surcharge is charged if the tax is not paid by 3 March, however again, this has been deferred and will only be added if the tax is not paid by 1 April. Further late payment penalties will be charged at the usual 6 and 12 month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up. 

Taxpayers have longer to organise a Time to Pay arrangement with HMRC before they must pay any penalties or surcharges. Once individuals have filed their 2020/21 tax return, they can contact HMRC and set up an online payment plan to spread tax liabilities of up to £30,000 over up to 12 monthly instalments. 

This may give a welcome respite to some who need some extra time to get their affairs for 2020/21 in order. 

However, it should be noted that for Class 2 National Insurance contributions to count towards qualifying years for state pension purposes, the liability must be paid by 31 January and not delayed. 

As well as the interest which is payable, taxpayers should also be aware that a return filed after 31 January is still considered to be late and therefore the enquiry window for HMRC to raise queries into the return in the future is extended. 

HMRC have said that these extended deadlines will help to ease pressure on those affected by COVID-19. The cynical amongst us may say this is designed not just to help the taxpayer but also to ease pressure on HMRC, especially as latest figures suggest that only just over half of required tax returns have so far been filed with HMRC, but we’ll have to see how these new filing extensions help to get the rest of the returns submitted! 

If you have any questions about your tax affairs, please get in touch with your usual Larking Gowen contact. You can find contact details in the Our People section of the website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk. 

Nina Baker