We would like our clients to know that HMRC’s Time to Pay arrangement is still available to help you pay your tax bill.
Once you have filed your 2020-21 tax return, you can set up an online payment plan to spread Self-Assessment bills of up to £30,000, over and up to 12 monthly instalments.
The payment deadline for Self Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March. This year, like last year, HMRC is giving customers more time to pay or set up a payment plan. Self Assessment customers will not be charged the 5% late payment penalty if the tax is paid or a payment plan is set up by midnight on 1 April. You can pay the tax bill or set up a monthly payment plan online at GOV.UK.
There is no change to the filing or payment deadline and other obligations are not affected. This means that:
Interest will be charged on late payment. The late payment interest rate from 4 January 2022 is 2.75%
A return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness. This means that: –
- there will be an extended enquiry window.
- for returns filed after 28 February the other late filing penalties (daily penalties from 3 months, 6 and 12 month penalties) will operate as usual.
- a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1 April 2022. 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.
HMRC will not charge late filing penalties for SA700s and SA970s received in February – these returns can only be filed on paper.
For SA800s and SA900s HMRC will not charge a late filing penalty if you file online by the end of February – the deadline for filing SA800s and SA900s on paper was 31 October. Those who file late on paper will be charged a late filing penalty in the normal way. You can appeal against this penalty if they have a reasonable excuse for filing their paper return late.
The self-employed who need to claim certain contributory benefits soon after 31January 2022 need to ensure their annual Class 2 National Insurance contributions (NICs) are paid on time – this is to make sure their claims are unaffected. Class 2 NICs are included in the 2020 to 2021 balancing payment that is due to be paid by 31 January 2022. Benefit entitlements may be affected if they:
- couldn’t pay their balancing payment by 31 January 2022, and
- have entered into a Time to Pay arrangement to pay off the balancing payment and other self assessment tax liabilities through instalments.