HMRC has announced that taxpayers will not be charged the 5% late payment penalty if they pay their tax bill or set up a payment plan by the 1st of April 2021.
Avoid the 5% late payment penalty
The payment deadline for the self-assessment tax return is usually the 31st of January, and interest is automatically charged from the 1st of February on any outstanding amounts. A 5% late payment penalty is also charged on any unpaid tax from the 3rd of March. However, in light of the coronavirus pandemic, HMRC is taking a more lenient approach and is giving taxpayers more time to pay their tax bill or set up a payment plan.
This year, taxpayers will not be charged a 5% late payment penalty as long as they pay their tax bill or set up a payment plan by the 1st of April 2021. This must be done by midnight on the 1st of April, or a late payment penalty will be applied. Further late penalties will also be applied at 6 and 12 months (August 2021 and February 2022) on any tax outstanding where a payment plan has not been set up.
HMRC advises, where possible, taxpayers pay their bill in full because this is the only way to stop interest accruing. There are several ways for you to pay your self-assessment tax bill, such as by post, online or via your bank. Self-assessment taxpayers who have yet to file their 2019/20 tax return should file by the 28th of February 2021 to avoid a late filing penalty of £100.
Benefit from a Time to Pay arrangement
Many small businesses and individuals have suffered financially due to the coronavirus, and the prospect of having to pay a tax bill in one go can seem daunting. With HMRC’s self-serve Time to Pay arrangement, you can set up an online payment plan which allows you to pay your self-assessment tax bill in monthly instalments up to January 2022. More than 97,260 taxpayers have already set up a payment plan online, totalling more than £367 million.
Jim Harra, HMRC’s Chief Executive, said:
“Anyone worried about paying their tax can set up a payment plan to spread the cost into monthly instalments. Support is available at GOV.UK to help anyone struggling to meet their obligations.”
If you are worried about paying your tax bill and cannot set up a payment plan online, HMRC is urging you to contact them immediately for help and support. They have a dedicated payment hotline which you can call – 0300 200 3822.
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