HMRC plans points-based penalties for self assessment
The current standard £100 fine for late filing of self assessment tax returns is due to be changed to a points-based system from 2026
HMRC has confirmed that the penalty system will be reformed in a bid to curb abuse of the self assessment system and support taxpayers who make occasional mistakes.
The planned penalty reforms for paying tax late will be based on the length of time the tax is outstanding but will only affect the 5% of non-compliant taxpayers.
The earlier an overdue tax payment is made, the lower the penalty charge will be.
An HMRC spokesperson said: ‘We are reforming penalties so taxpayers who occasionally miss the filing deadline will not face financial penalties. Instead we will focus on those who persistently miss filing and payment deadlines.’
The planned penalty reforms for sending in a tax return late will be based on points. Taxpayers who miss a filing deadline will initially be given a point, with a financial penalty being charged only once a set number of points is reached.
This approach recognises that taxpayers who occasionally miss deadlines should be encouraged to comply with filing obligations, rather than immediately being charged a penalty.
For example, a payment made within 30 days will have a lower penalty charge than one made after 30 days. This design encourages those that can pay to do so, while taking appropriate action against persistent non-compliance.
The rule change is expected to raise £155m in penalties according to the Budget Red Book calculations issued in March 2023.
The new penalty regime will penalise the minority who persistently do not comply by missing filing and payment deadlines, while being more lenient on those who make the occasional slip-up.
‘We support all taxpayers to get their tax right, and through HMRC’s extensive advertising and supportive approach 95% of customers now pay their tax on time,’ said the HMRC spokesperson.
These reforms already apply for VAT. However, in December 2022 the government announced businesses within scope of Making Tax Digital (MTD) for Income Tax would have more time to prepare for its introduction, with MTD to be phased in from April 2026.
It was also announced that the reforms to penalties would come into effect for these taxpayers when they become mandated to join MTD (instead of in 2024).
Some income tax taxpayers will remain within the existing late filing and late payment penalty rules for longer, which was reflected in the spring Budget estimate.
- Published in Self Assessment
Fraud warning for self-assessment taxpayers
Self assessment taxpayers should guard against being targeted by fraudsters as more than 10,000 websites attempt to defraud individuals, warns HMRC
In the 12 months to August 2022, HMRC responded to more than 180,000 referrals of suspicious contact from the public, of which almost 81,000 were scams offering fake tax rebates.
They have also responded to 55,386 reports of phone scams in total, 87% down on the previous year. In April 2020 HMRC received reports of only 425 phone scams. In August 2022 this was 5,913, while it received reports of 10,565 malicious web pages for takedown.
Criminals claiming to be from HMRC have targeted individuals by email, text and phone with their communications ranging from offering bogus tax rebates to threatening arrest for tax evasion. Contacts like these should sound alarm bells – HMRC would never call threatening arrest.
Anyone contacted by someone claiming to be from HMRC in a way that arouses suspicion is advised to check the scams advice on gov.uk.
Taxpayers can report any suspicious activity to HMRC by forwarding suspicious texts claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Any tax scam phone calls can be reported to HMRC using the online form on gov.uk.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Never let yourself be rushed. If someone contacts you saying they’re from HMRC, wanting you to urgently transfer money or give personal information, be on your guard.
‘HMRC will never ring up threatening arrest. Only criminals do that.
‘Tax scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a rebate. Contacts like these should set alarm bells ringing, so take your time and check ‘HMRC scams advice’ on gov.uk.’
Fraudsters target taxpayers when they know they are more likely to be in contact with HMRC, which is why anyone completing self assessment tax returns should be extra vigilant to this activity. There is a risk they could be taken in by scam texts, emails or calls either offering a ‘refund’ or demanding unpaid tax, thinking that they are genuine HMRC communications referring to their self assessment return.
HMRC warned that some taxpayers who have not done a self assessment return before might be tricked into clicking on links in these emails or texts and revealing personal or financial information to criminals.
The deadline for filing paper tax returns for the 2021-22 tax year is 31 October 2022, and 31 January 2023 for those filing their tax return online. Taxpayers who file their return online via gov.uk should not share their HMRC login details. Someone using the details could steal from the taxpayer or make a fraudulent claim in their name.
HMRC is actively tackling the scams and fraudsters who attempt to mimic genuine HMRC activity and messages. The department’s dedicated customer protection team works continuously to identify and close down scams.
HMRC also tackles misleading websites designed to make people pay for services that should be free or low cost, charging to connect people to free HMRC phone helplines. To protect the public, HMRC formally disputes and takes ownership of HMRC-branded internet domain or website names. Since 2017, the department has recovered more than 183 websites hosting low-value services such as call-connection sites, saving the public millions of pounds.
Over the last year the tax authority has also worked with the telecoms industry and Ofcom to remove 48 phone numbers being used to commit HMRC-related phone scams.
- Published in Self Assessment
Second payment on account tax due 31 July
Individuals who fill in a self-assessment tax returns and owe more than £1,000 in tax need to pay their latest instalment by 31 July
This affects tax which has not been collected in other ways, for example through an adjustment to a tax code, which needs to be paid via payment on account.
Payments on account are tax payments made twice a year by taxpayers to help them stay on top of their payments and spread the cost of the upcoming year’s tax.
Generally this applies to people who are self-employed or have other income from property – for most people who are employed, their tax is managed under PAYE.
Payment is spread over two instalments during the year and is calculated based on the previous year’s tax bill. Each payment is typically 50% of the last bill. A final payment is made after the actual tax return is submitted.
Kevin Sefton, CEO, untied, said: ‘The payment on account deadlines are 31 January and 31 July which means the second cut-off date is fast approaching.
‘In theory tax payment on account helps the self-employed spread out their bill. However, it can lead to more financial hardship for those who have been hit by the cost of living crisis and haven’t put the money way already.
‘We always advise individuals who have to pay these two sums every year to set money aside regularly in order to pay their liabilities at the beginning and midpoint of every calendar year.
‘If you are having difficulties paying your tax bill, don’t ignore it – contact HMRC as soon as you can, to see if they can set up a payment plan for you. It also makes sense to submit tax return information early, as this provides time for planning and identifying potential tax savings.’
- Published in Self Assessment, Tax return
Business expenses and tax breaks confuse self employed
One of the biggest problems for self employed taxpayers relates to confusion over allowable business expenses when completing self assessment returns
Many self-employed people experience difficulties completing self assessment returns due to ‘confusing terminology, ambiguity around allowable business expenses and uncertainty transferring figures from personal spreadsheets to HMRC’s system. These challenges resulted in a more time-consuming process and errors being made’, finds the latest HMRC commissioned research into the tax experiences of the self employed.
There was widespread consensus that the first year of self employment was by far the most challenging, with many emphasising the level of complexity and stress induced by the process of figuring out what they needed to do. This anxiety was further compounded by their fear of the potential financial repercussions of making a mistake.
The greater the number of roles and sources of income, the more taxpayers found it difficult to keep on top of their financial records, in turn impacting effective tax management.
The process of maintaining good financial records throughout the year was also challenging, presenting additional complications by increasing the difficulty of tax management.
For some self-employed customers managing cash flow was also a challenge. This difficulty was most prominent for those with irregular hybrid incomes as it was hard to predict and align the timings of their incomings and outgoings, exacerbated when combining PAYE and self-employed earnings.
Agents and accountants were mostly employed to help overcome tax management rather than financial management challenges; for example, to accurately complete self assessment returns.
Using a tax agent was also felt to provide the added benefit of saving time, particularly for those who were time-poor, and saving money, for example, by receiving guidance on the allowable expenses they could claim for.
The ‘payments on account’ process also made planning for tax payments more challenging. This stemmed from HMRC’s system of calculating tax bills based on taxpayers’ income from the previous year and ‘payment on account’ for the year ahead.
The process of planning tax payments based on this system was particularly challenging for those with irregular incomes that fluctuated significantly from year to year.
One respondent said: ‘Because my income can fluctuate, it can be quite frustrating to end up paying loads on account when you know for a fact that you’ve not earned as much. It makes it hard to plan around.’
Many self employed people experienced difficulties completing their self assessment ‘due to ambiguity around allowable business expenses, confusing terminology and uncertainty transferring figures from personal spreadsheets to HMRC’s system’. These challenges resulted in a more time-consuming process and errors being made.
Completing self assessment was seen as challenging across the range of tax and income complexity due to uncertainty around how to complete some parts of the forms. While it was said to have improved over time, the terminology within the return was still not felt to be intuitive and simple to understand due to the use of ‘jargon’ and acronyms.
As a result, some people found it difficult to understand the questions and to know which boxes to tick and where to input information. This issue was said to be compounded by the frequency of changes to the return, with these updates adding to their uncertainty each year and requiring time to process and understand.
Some also voiced frustration about the complexity of the ID number and process of retrieving this and inputting it into the Government Gateway. This was seen as a ‘convoluted system’ and was especially frustrating if the code was input incorrectly locking users out of the system.
Long-standing self-employed workers frequently stated that the tone in HMRC communications had generally improved and was more personable, which made completing the self assessment process less stressful.
Respondents suggested a number of ways for HMRC to improve their services, including helping them track their finances and plan for tax payment, for example, through real-time self assessment inputs, improving the speed and accuracy of completing returns, for example, through downloadable spreadsheets, and providing more personal and tailored support, for example, for those in their first year of self-employment.
- Published in HMRC, Self Assessment
570k scams hit self assessment taxpayers, HMRC warns
HMRC is warning self assessment taxpayers to be on their guard following the tax return deadline after more than 570,000 scams were reported to HMRC in the last year
At this time of year, self assessment taxpayers are at increased risk of falling victim to scams. They can be taken in by scam texts, emails or calls either offering a ‘refund’ or demanding unpaid tax, thinking that they are genuine HMRC communications referring to their self assessment return.
Criminals try and steal money or personal information, using phone calls, texts and emails to try and dupe citizens, and often mimic government messages to make them appear authentic.
In the 12 months to January 2022, nearly 220,000 scams reported to HMRC offered bogus tax rebates. The tax authority responded to 572,423 referrals of suspicious contact from the public.
There were also hundreds of telephone numbers identified as faking HMRC to try to scam taxpayers. HMRC has been working with the telecoms industry and Ofcom to remove more than 920 phone numbers being used to commit HMRC-related phone scams.
The number of phone scams has escalated in the last year with 267,671 reports of phone scams in the last year. In April 2020 HMRC received reports of only 425 phone scams while by January 2022 this had soared to 3,995.
The internet is another minefield with more than 6,160 malicious web pages taken down over the 12-month period.
The various government covid schemes also provided fertile territory for fraudsters. Since March 2020, HMRC detected 463 Covid-related financial scams, mostly disseminated by text message and it worked with internet service providers to take down 443 Covid-related scam web pages.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘If someone contacts you saying they’re from HMRC, wanting you to transfer money or give personal information, be on your guard.
‘Never let yourself be rushed, and if you’re in any doubt then check our ‘HMRC scams’ advice on gov.uk.’
Following the extension of the self assessment deadline to 28 February 2022, taxpayers have until 1 April to pay their outstanding tax bill or set up a time to pay arrangement to avoid receiving a late payment penalty. Interest has been applied to all outstanding balances since 1 February.
Taxpayers should report suspicious phone calls using the form on gov.uk and forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.
HMRC has a dedicated team working on cyber and phone crimes. They use innovative technologies to prevent misleading and malicious communications from ever reaching the taxpayer. Since 2017, these technical controls have intercepted 500 million emails. More recently, new controls have prevented 90% of the most convincing SMS messages from reaching the public and controls have been applied to prevent spoofing of most HMRC helpline numbers.
HMRC is also reminding people to double check websites and online forms before using them to complete their 2020/21 tax return. People can be taken in by misleading websites designed to make them pay for help in submitting tax returns or charging to connect them to HMRC phone lines.
HMRC’s advice to the public:
Stop:
- Take a moment to think before parting with your money or information.
- If a phone call, text or email is unexpected, don’t give out private information or reply, and don’t download attachments or click on links before checking on gov.uk that the contact is genuine.
- Do not trust caller ID on phones. Numbers can be spoofed.
Challenge:
- It’s ok to reject, refuse or ignore any requests – only criminals will try to rush or panic you.
- Search ‘scams’ on gov.uk for information on how to recognise genuine HMRC contact and how to avoid and report scams.
Protect:
- Forward suspicious texts claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Report tax scam phone calls on gov.uk.
- Published in Self Assessment
1.5m still to file self assessment tax returns by 28 February
Time is running out for the 1.5 million taxpayers who still need to file their self assessment tax return and avoid a £100 penalty, HMRC has warned
HMRC extended the deadline for completing 2020/21 tax returns to 28 February, deferring late filing penalties for a second year.
About 12.2m taxpayers are expected to file a tax return for 2020/21 tax year and more than 10.2 million were received by 31 January. This still leaves 1.5m tax returns which need to be completed.
HMRC has given taxpayers until 1 April to pay their outstanding tax bill or set up a time to pay arrangement to avoid receiving a late payment penalty. Interest has been applied to all outstanding balances since 1 February.
The existing Time to Pay service allows any individual or business who needs it, the option to spread their tax payments over time. Self assessment taxpayers with up to £30,000 of tax debt can do this online once they have filed their return. Almost 100,000 people have used this service since April last year, spreading the cost of their tax bill into manageable monthly instalments.
For anyone who owes more than £30,000, or needs longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘There is one week left to complete your tax return if you haven’t done so already. And for anyone who is worried about paying their tax bill, there is support available – search ‘pay my self assessment’ on gov.uk.”
From 22 February, taxpayers will be able to make self assessment payments quickly and securely through the HMRC app either connecting to their bank to make their payments or pay by direct debit, personal debit card or corporate/commercial credit/debit card.
The 2020/21 tax return covers earnings and payments during the pandemic. Taxpayers need to declare Covid-19 grants and support payments up to 5 April 2021 on their self assessment, as these are taxable, including:
- Self-Employment Income Support Scheme (SEISS);
- Coronavirus Job Retention Scheme; and
- other COVID-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme
The £500 one-off payment for working households receiving tax credits should not be reported in self assessment.
Kevin Sefton, CEO of untied, said: ‘We urge affected taxpayers to take control of their tax returns now to avoid adding an extra £100 to their tax bill. Even if individuals think they have a reasonable excuse for filing late, it’s still best to file returns as soon as you can possibly do so and then contact HMRC later about appealing any penalty.’
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. It is important to always type in the full online address www.gov.uk/hmrc to get the correct link for filing their self assessment return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If you’re in doubt, do not to reply directly to anything suspicious, but contact HMRC straight away and search gov.uk for ‘HMRC scams’.
- Published in Self Assessment
Four million still to file ahead of self assessment deadline.
A third of taxpayers are yet to submit their completed self assessment tax return and pay any tax owed ahead of the deadline on 31 January, HMRC has warned
More than 12.2 million customers are expected to complete a tax return for the 2020/21 tax year.
HMRC is urging the four million taxpayers still to file their tax return, pay any outstanding liabilities or set up a payment plan, to do so ahead of the deadline as 5% interest will be applied to all outstanding balances from 1 February.
However, earlier this month, HMRC announced they would waive penalties for one month for late filing of tax returns and late payments. The changes mean:
- anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February; and
- anyone who cannot pay their tax liabilities by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We know some customers may struggle to meet the self assessment deadline on 31 January which is why we have waived penalties for one month, giving them extra time to meet their obligations.
‘And if anyone is worried about paying their tax bill, they can set up a monthly payment plan online – search ‘pay my self assessment’ on gov.uk.’
There are no changes to HMRC’s self assessment helpline opening times. The telephone service will not be open on Saturday 29 or Sunday 30 January and will operate as normal until 6pm on Monday 31 January.
The existing time to pay service allows any individual or business who needs it the option to spread their tax payments over time. Self assessment taxpayers with up to £30,000 of tax debt can do this online once they have filed their return.
1 April is the last date to pay any outstanding tax or make a time to pay arrangement, to avoid a late payment penalty.
If taxpayers owe more than £30,000, or need longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
The 2020/21 tax return covers earnings and payments during the pandemic. Taxpayers will need to declare if they received any grants or payments from the Covid-19 support schemes up to 5 April 2021 on their self assessment, as these are taxable, including:
Self-Employment Income Support Scheme;
Coronavirus Job Retention Scheme; and
other Covid-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme.
The £500 one-off payment for working households receiving tax credits should not be reported in self assessment.
Self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 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 2020/21 balancing payment that is due to be paid by 31 January 2022.
Self-employed taxpayers who have profits below £6,475 in the 2020/21 tax year and want to pay voluntary Class 2 NICs for contributory benefit after 31 January 2022 or paid voluntary Class 2 NICs via self assessment before 31 January 2022 but will not file their return until after 31 January will need to contact HMRC on 0300 200 3500 for assistance.
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. Taxpayers should always type in the full online address www.gov.uk/hmrc to get the correct link for filing their self assessment return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search gov.uk for ‘HMRC scams’.
- Published in Self Assessment
HMRC warns taxpayers about self assessment tricksters
As HMRC prepares to send emails and text reminders to self assessment taxpayers, the department is reminding them to be on their guard after nearly 800,000 tax-related scams were reported in the last year
Fraudsters use self assessment to try and steal money or personal information from unsuspecting individuals. In the last year alone, HMRC has responded to 797,010 referrals of suspicious contact from the public and some 357,567 of these offered bogus tax rebates.
In the last 12 months, HMRC has also worked with the telecoms industry and Ofcom to remove more than 1,282 phone numbers being used to commit HMRC-related phone scams.
The scale of the problem is vast with 8,561 malicious web pages reported for takedown.
The self assessment deadline is 31 January 2022 and taxpayers may expect to hear from HMRC at this time of year.
More than four million emails and SMS will be issued this week to self assessment customers pointing them to guidance and support, prompting them to think about how they intend to pay their tax bill, and to seek support if they are unable to pay in full by 31 January.
However, the department is also warning customers to not be taken in by malicious emails, phone calls or texts, thinking that these are genuine HMRC communications referring to their self assessment tax return.
Myrtle Lloyd, HMRC director general for customer services, said: ‘Never let yourself be rushed. If someone contacts you saying they’re from HMRC, wanting you to urgently transfer money or give personal information, be on your guard.
‘HMRC will also never ring up threatening arrest. Only criminals do that.
‘Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on gov.uk and find out how to report them to us.’
Criminals use emails, phone calls and text messages to try and dupe individuals, and often mimic government messages to make them appear authentic. They want to trick their victims into handing over money or personal or financial information.
Customers can report suspicious phone calls using a form on gov.uk and should forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.
HMRC has a dedicated team working on cyber and phone crimes. They use innovative technologies to prevent misleading and malicious communications from ever reaching the taxpayers. Since 2017 these technical controls have blocked 500 million emails. More recently, new controls have prevented 90% of the most convincing SMS messages from reaching the public and controls have been applied to prevent spoofing of most HMRC helpline numbers.
HMRC is also reminding self assessment customers to double check websites and online forms before using them to complete their 2020/21 tax return. People can be taken in by misleading websites designed to make them pay for help in submitting tax returns or charging to connect them to HMRC phone lines.
HMRC’s advice to the public:
Stop:
• take a moment to think before parting with your money or information;
• if a phone call, text or email is unexpected, don’t give out private information or reply, and don’t download attachments or click on links before checking on gov.uk that the contact is genuine; and
• do not trust caller ID on phones. Numbers can be spoofed.
Challenge:
• it’s ok to reject, refuse or ignore any requests – only criminals will try to rush or panic you; and
• search ‘scams’ on gov.uk for information on how to recognise genuine HMRC contact and how to avoid and report scams.
Protect:
• Forward suspicious texts claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Report tax scam phone calls on gov.uk.
• Contact your bank immediately if you think you’ve fallen victim to a scam, and report it to Action Fraud (in Scotland, contact the police on 101).
- Published in Self Assessment
31 October deadline for paper self assessment tax returns
HMRC is reminding taxpayers to check that they have the correct information in order to complete their paper self assessment tax returns by the month end deadline
The deadline for 2020/21 paper tax returns is 31 October 2021 for those completed on paper forms and 31 January 2022 for online returns.
While the end of January is more than three months away, HMRC has already seen thousands of people filing their returns – more than 63,500 customers filed their tax return on 6 April, the first day of the tax year. Taxpayers can file before the January deadline but still have until 31 January to pay.
Any customer who is new to self assessment must register via gov.uk to receive their Unique Taxpayer Reference (UTR). Self-employed individuals must also register for Class 2 National Insurance.
HMRC is encouraging taxpayers to register early so that they can access guidance and be aware of what they need to do. This includes record keeping, knowing when the filing and payment deadlines are, and the potential for a first tax payment to include a payment on account.
This year, taxpayers will also have to declare if they received any grants or payments from Covid-19 support schemes up to 5 April 2021 as these are taxable, including:
• Self-Employment Income Support Scheme (SEISS);
• Coronavirus Job Retention Scheme (CJRS); and
• other Covid-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme.
If you are employed and received CJRS (furlough) payments during the 2020-21 tax year, you will need to enter your earnings and income tax as stated on your P60. Your P60 will include any furlough payments you received up to 5 April 2021, so you do not need to include furlough payments on your tax return.
If you are self-employed or in a partnership and received any coronavirus financial support, you will need to declare it on your self assessment.
If you are self-employed, you should use:
- form SA103S – short if your tax affairs are simple and your turnover was below the VAT threshold (£85,000) for the tax year; or
- form SA103F – full if your annual turnover was above the VAT threshold for the tax year.
If you’re in a partnership, you should use:
- form SA104S – short if you’re only declaring partnership trading income; or
- form SA104F – full to record all the possible types of partnership income you might receive
HMRC recognises that some taxpayers may be worrying about paying their tax bill. They can access support to help pay any tax owed, and may be able to set up their own monthly payment plan online by using HMRC’s self-serve Time to Pay facility. Taxpayers should contact HMRC for help if they have concerns about paying their bill.
HMRC’s Myrtle Lloyd, director general for customer services, said: ‘We want to help people get their tax returns right by making sure they are prepared and have everything they need before they start their self assessment. If anyone is worried about paying their tax bill, support is available – search ‘time to pay’ on gov.uk.’
The fastest way to complete a tax return is online via a taxpayer’s Personal Tax Account. They will need their UTR to access their tax return, as well as details of their income or earnings and other financial records.
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search gov.uk for ‘HMRC scams’.
- Published in Filing Deadlines, Self Assessment
1 April deadline to set up self assessment payment plans
Self assessment taxpayers have just over a week to pay any outstanding tax liabilities in full or set up an online payment plan for the 2019 to 2020 financial year to avoid incurring penalty charges, HMRC has warned
Due to the impact of the Covid-19 pandemic, HMRC has given self assessment taxpayers more time to pay their tax or set up a payment plan without facing a 5% late payment penalty charge, as long as arrangements were in place by midnight on 1 April.
Those who have yet to settle their liabilities for the 2019 to 2020 financial year can pay their tax bill or set up a monthly payment plan online at gov.uk. They can pay online, via their bank, or by post. Alternatively, setting up a Time to Pay arrangement allows taxpayers to spread the cost of their self assessment tax bill into monthly instalments until January 2022.
The self-serve Time to Pay data is for online payment plans created between 1 October 2020 and 21 March 2021. This system allows taxpayers to set up a payment plan online to help them manage the cost of their tax bill up to £30,000. Taxpayers will be able to pay their tax bill in monthly instalments, up to January 2022. For those with bills over £30,000, individual repayment arrangements need to be negotiated with HMRC directly.
Almost 117,000 taxpayers have set up a self-serve Time to Pay arrangement online, totalling repayments of more than £437m.
Anyone worried about paying their tax and unable to set up a payment plan online should contact their accountant or HMRC for help and support on 0300 200 3822.
There is no change to the payment deadline and other obligations are not affected. This means that:
the payment deadline remains 31 January 2021 and interest will be charged on late payment. The current rate of late payment interest is 2.6%
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 2021. Further late payment penalties are charged at 6 and 12 months (August 2021 and February 2022 respectively), on tax outstanding where a payment plan has not been set up
Self assessment taxpayers who are required to make Payments on Account and know their 2020 to 2021 tax bill is going to be lower than in 2019 to 2020 – for example, due to loss of earnings because of Covid-19 – can reduce their payments. Visit gov.uk to find out more about Payments on Account and how to reduce them.
- Published in Self Assessment
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