Self assessment late penalties waived

HMRC announced that both the late filing and late payment penalties for 2020-21 tax year are being waived for one month.

Why have the tax return penalty waivers been introduced?

The idea behind the penalty waivers is to give taxpayers and their tax agents some extra time to sort out their tax return and find the money to pay their tax bill. Its another measure to counterbalance the impacts of COVID-19 on businesses.

The deadline to file your 2020-21 tax return and pay the tax you owe was midnight on 31^st January 2022. HMRC says that 6.5 million people in self assessment have already filed. But they’re expecting 12.2 million in total.

Financial Secretary to the Treasury, Lucy Frazer, said:

“We recognise that Omicron is putting people under pressure, so we are giving millions of people more breathing space to manage their tax affairs.

“Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.”

HMRC’s Deputy Chief Executive and Second Permanent Secretary, Angela MacDonald, said:

“We know the pressures individuals and businesses are again facing this year, due to the impacts of COVID-19. Our decision to waive penalties for one month for Self Assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.”

Self assessment penalty waiver details

Tax return submission

There will be no late filing penalty to pay as long as you submit your tax return online by 28^th February 2022.

Tax bill payment

You won’t get a late payment penalty if you either pay your tax bill in full, or set up a Time To Pay arrangement with HMRC, by April 1^st 2022.

But be aware that you’ll be charged interest at a rate of 2.75% from the 1^st February, in addition to your existing tax bill. So its still more financially beneficial for you to pay as soon as possible.

After these penalty waiver dates have passed, the usual penalty system will kick in as normal.

Time To Pay is a way to pay your self assessment tax bill in 12 monthly instalments. If your bill is under £30,000 you can set this up online yourself, after you’ve submitted your tax return. If your bill is over £30,000 or you think you’ll need longer than 12 months to pay, you might still be able to make a Time to Pay arrangement. But you’ll need to phone the Self Assessment Payment Helpline on 0300 200 3822, rather than use the online service.

Covid grants and seiss payments

Just a quick reminder that you must include any payments or grants from the COVID-19 support schemes on your self assessment tax return. They are taxable and include: