Self-assessment deadline extended, and late penalty fee waived for one month

Her Majesty’s Revenue and Customs (HMRC) recently announced that they would be waiving the late filing and repayment penalties for Self -Assessment taxpayers and businesses, for one month. 

As outlined in our previous article last year, this marks the second consecutive year that HMRC have waived the late penalty fee.

Of the 12.2 million taxpayers who need to submit their tax returns by 31 January 2022, an estimated 5.7 million have yet to do so.

It is however important to note that although this late payment deadline has been further extended, interest will still apply to that tax which is paid late.

How long is the late penalty fee being waived for? 

Under normal circumstances, those who do not file their tax returns by 31 January receive penalties for late submission. This usually comes in the form of a 5% late payment charge on any unpaid tax that is still outstanding by 3 March. 

However, this year, like last year, HMRC has decided to effectively extend this deadline by one month. Even though the deadline still technically remains the 31 of January, the penalty waivers will mean that anyone who cannot, for any reason, file their return by 31 January will not receive any late filing penalties so long as they file their tax returns online by 28 February. 

This includes anyone who cannot pay their Self-Assessment tax by the 31 January deadline. Taxpayers who cannot pay their Self-Assessment tax by the deadline will not receive any payment penalty so long as they either pay in full or set up a Time to Pay plan by 1 April. The Time to Pay service allows any individual taxpayer or tax-paying business to spread out their tax payments over a longer period. So long as they have already filed their returns, Self-Assessment taxpayers with up to £30,000 of tax debt may access this service. 

However, the HMRC is still encouraging taxpayers to file and pay as soon as they can and should only take advantage of the extended deadline if they absolutely must.

Why has HMRC waived the late penalty fee for a second year? 

HMRC has recognised the significant pressure that the pandemic has placed on both individual taxpayers and businesses. As COVID-19 and its variants continue to create obstacles for normal day-to-day functioning, HMRC understands that it is more difficult than usual to meet the usual deadline of 31 January. The penalty waivers are meant to give some relief to those most adversely affected by the pandemic by allowing an extra month without worry of receiving a penalty.

Deputy Chief Executive and Second Permanent Secretary of HMRC Angela MacDonald commented on the announcement, saying: “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.” 

If you’re thinking about financial planning and ways you can mitigate against tax to retain more of your wealth, check out our free guide on tax planning strategies. Alternatively, give us a call on 0333 323 9065 to book a free non-committal initial consultation with a member of our team.

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Please note: the Financial Conduct Authority does not regulate tax advice.