HMRC has extended the penalty-free Self Assessment deadline due to COVID-19 pressures

HMRC said it was still urging individuals to file and pay their taxes on time, but cautioned that outstanding tax debts will be subject to interest from February 1, 2021. 

For the next month, HM Revenue and Customs (HMRC) has eliminated late filing and payment penalties for Self Assessment taxpayers. 

Their leniency provides taxpayers more time to complete and pay their 2020-2021 tax returns.


Why has HMRC taken this step?
HMRC understands the stress that Self Assessment taxpayers and their agents are under this year. COVID-19 is clearly affecting the capacity of certain agents and taxpayers to meet their obligations by the January 31 deadline.

Penalty waivers offer taxpayers who need additional time to complete and file their returns online, as well as pay the tax owed, without fear of being penalised. 

HMRC's Deputy Chief Executive and Second Permanent Secretary, Angela MacDonald, said:

“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.”

Is there a new deadline?
The deadline for filing and paying is still January 31, 2022. The new extension means that: 

• If you file your return online by February 28th, you will not be charged a late filing penalty if you miss the January 31st deadline. 

• Anyone who misses the 31 January deadline for paying their Self Assessment tax will not be charged a late payment penalty provided they pay their tax in full or set up a Time to Pay agreement before 1 April. 

Interest will be due on the 1st of February, as is customary, therefore it is still preferable to pay on time if at all feasible.


Can I set up a Time to Pay arrangement?
This is a service that allows individuals or businesses to spread their tax payments out over a longer period of time. Self-assessment taxpayers with a tax obligation of up to £30,000 can do so online after filing their return. 

The tax return for the years 2020 to 2021 includes earnings and payments made during the pandemic. Taxpayers must indicate on their Self Assessment if they received any grants or payments from the COVID-19 assistance schemes between 5 April 2021 and 5 April 2021, as these are taxable. 

• Self-Employed Income Support Program

• Job Retention Program for Coronavirus 

• other COVID-19 grants and support payments, including self-isolation payments, local government subsidies, and payments for the Eat Out to Help Out scheme

Self-assessment taxpayers who pay their tax or set up a time to pay arrangement plan before midnight on April 1 will avoid the 5% late payment penalty. On GOV.UK, they can pay their tax bill or set up a Time to Pay agreement.


Are there any consequences if I fail to make payments after the extension?
From February 1, 2022, interest will be charged on any unpaid balance. Taxpayers who owe more than £30,000 in Self Assessment debt or who need more than 12 months to pay may be able to set up a Time to Pay plan by phoning the Self Assessment Payment Helpline at 0300 200 3822.


What you should look out for
HMRC advises people to be cautious if they are called unexpectedly by someone requesting money or personal information. To acquire the exact link for filling their Self Assessment return online securely and for free, taxpayers should always type in the entire online URL www.gov.uk/hmrc. 

HMRC receives a large number of emails, phone calls, and texts from fraudsters purporting to be from the department. If you're unsure, HMRC recommends contacting them immediately and searching GOV.UK for 'HMRC frauds.' You can also report any fraudulent activities here.


The impact of COVID-19 on businesses has been overwhelming, and many business owners' experiences have been harmed as a result. HMRC's decision to give taxpayers an extension will now provide them with some breathing room to better manage their finances. 

Although businesses appreciate the extension, the decision to offer it was made on the spur of the moment, as it was only announced a few days ago. This only adds to the reality that new tax legislation and policies are prone to rapid change, which can be confusing even for people who are well-versed in the tax system.


Persona Finance recognises these challenges and works to assist each firm by simplifying their accounting needs. We accomplish so by providing the most essential accounting services. For more information on how we can provide even greater value to your business, please contact us at [enquiries@personafinance.co.uk].