We would like to let everyone know that in the light of the current disruption caused by Covid-19, HMRC has announced measures to support individuals who have difficulties settling their personal tax liabilities due on 31 January.
Deferral of the late payment surcharge
HMRC normally levy a late payment penalty of 5% of the outstanding tax bill where tax has not been paid by 2 March.
This year, HMRC have announced that anyone who cannot pay their Self Assessment tax 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.
Although interest will still be charged (at 2.75%) from 1 February, the deferral of the late payment surcharge will be of benefit if you are struggling to pay your personal tax due on 31 January because of the fall-out from Omicron, or for any other reason.
Time to Pay for tax debts of up to £30,000
In most years, needing to reach a Time to Pay agreement with HMRC requires a call with HMRC’s debt management team and intrusive questioning before an agreement will be reached to pay the outstanding debt over a number of months.
This year, HMRC has announced that those with tax debts of less than £30,000 will be able to make their own Time to Pay agreement through the government gateway without having to contact HMRC’s debt management team. The automated service can be used provided that:
- The debt is less than £30,000
- You intend to clear the debt in full within 12 months
- Your self assessment tax return has been filed
- The application is made within 60 days of the due date, ie by 1st April 2022.
We finish with a reminder that regardless of HMRC’s stance on late filing penalties, the statutory filing deadline for 2020/21 personal tax returns remains 31st January 2022, and that interest will accrue on the unpaid tax from 1st February. If you think you may struggle to pay your tax on time, it is also the case that it is only after your tax return has been filed that it will be possible to apply to HMRC for a Time to Pay agreement to prevent a late payment surcharge from arising. It, therefore, remains important that tax liabilities are calculated, and tax returns completed and filed wherever possible by the statutory filing deadline of 31st January 2022.
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