Millions of people who need to fill in a tax return for the 2020/21 tax year have been given a month longer to complete their forms without being hit by a £100 penalty.
The usual deadline to submit your tax return online is January 31, and if you miss this date, you’d normally have to pay a £100 fine. However, HMRC has extended the deadline to February 28, so the £100 penalty won’t apply unless you fail to get your return in by this date.
HMRC also won’t start charging a late payment penalty of 5% on unpaid tax until April 1 this year, a month later than the usual March 3 deadline. According to HMRC data of the 12.2 million taxpayers due to submit their tax return by January 31 2022, only around 6.5 million have already done so.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said: “The government has announced extra breathing space for anyone who hasn’t got round to tackling their tax return. That sound you can hear is almost six million sighs of relief as last-minuters realise they have a bit longer to get cracking. It will be a lifeline to anyone who has had a difficult couple of years and is desperately trying to catch up financially.”
However, don’t put off tackling your tax return, as if you use an accountant to help you with yours, you may face delays in getting your form processed due to backlogs caused by Covid-related absences. HMRC will also charge interest on any unpaid tax bills at 2.75% from 1 February, so the longer you take to get your return in and pay what you owe, the more it’ll cost you.
“The last thing reluctant form-fillers should do is kick the can down the road” says Jason Hollands, managing director at online investing platform Bestinvest. “In fact, now is the time to make sure all paperwork is to hand and to make yourself aware of potential snags.
“Even if you have a tax adviser, the chances are that they are snowed under and the lack of face-to-face meetings can mean that mistakes and omissions in tax returns are more likely, and the sooner they can be cleared up the better. And if you have to deal with HMRC direct with queries or problems, there could be serious waiting times and delays, if last year was anything to go by. Don’t forget, self-assessors can be fined for errors, even if they are made in good faith.”
If you’re worried about being able to pay your tax bill, HMRC offers the chance to spread payments under the Time to Pay scheme. You can apply for the scheme online if your tax bills are up to £30,000. However, bear in mind that if you use the scheme, interest on the money you owe will be added at 2.75%.