HMRC waives late filing tax penalties for a month

By:

Date: 26 January 2021

A relieved woman smiles as she submits her self assessment tax return

HMRC has announced that anyone who cannot file their tax return by the 31 January 2021 deadline will not receive a late filing penalty as long as they file online by 28 February.

More than 8.9 million customers have already filed their tax return and HMRC is encouraging anyone who has not yet filed their tax return to do so by 31 January. As the deadline looms, however, HMRC has revealed that more than three million taxpayers have yet to file their returns and it says that the tax return filing rate for 2021 has been hampered by the coronavirus pandemic.

As a result, the UK tax body has announced that anyone who cannot file their return by the January deadline will not receive a late filing penalty as long as they file online by 28 February.

Despite this reprieve, HMRC has warned that taxpayers must still pay the tax they owe by 31 January - even if they have not filed their accounts. Anyone that hasn't paid what they owe will be charged interest from 1 February on any outstanding liabilities.

However, taxpayers who cannot afford to pay their tax bill on time can apply to spread their bill over up to 12 months. To take advantage of this service, taxpayers need to file their 2019/20 tax return before setting up a Time to Pay arrangement online.

HMRC chief executive Jim Harra, said: "We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can't pay it straight away.

"But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January.

"Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty. We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic."

Spreading tax payments over 12 months

HMRC has also increased support for customers who may need help paying the tax they owe. Once they have completed their 2019/20 tax return, customers can set up an online payment plan to spread self assessment bills of up to £30,000 over up to 12 monthly instalments using the Time to Pay service on the government website. More than 25,000 customers have already used the online service to manage their liabilities totalling £69.1 million.

Customers with bills over £30,000, or who need longer than 12 months to pay their bill, should call HMRC on 0300 200 3822.

Reducing payments on account

Taxpayers who are required to make payments on account, and know their bill is going to be lower than the previous tax year - for example due to loss of earnings because of COVID-19 - can reduce their payments on account. There's information on how to reduce payments on account on the government website.

Customers who are trying to contact HMRC in the run-up to the deadline can do so via webchat, Twitter or the self assessment phone helpline (0300 200 3310). They can also find the information they need via the free HMRC app or their Personal Tax Account.

Written by Rachel Miller.