HMRC update as tax penalties waived to ‘protect livelihoods’ – Britons urged ‘don’t delay’
HMRC provide advice on self-employed tax returns
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HMRC shared only 6.5million of the 12.2million self assessment taxpayers have completed and submitted their 2020 to 2021 tax return. To help accommodate those that cannot meet the January 31 deadline due to COVID-19, HMRC has extended the deadline to February 28.
The extension is intended to give taxpayers extra time to complete and file their returns online correctly without the pressure of looming penalties.
The deadline to file and pay taxes remains as January 31, however, those who cannot file their return by this date will not receive a penalty if they do so before February 28.
Additionally, those that cannot pay their Self Assessment tax will not receive late payment penalties if they pay or arrange Time to Pay by April 1.
Usually, late payment penalties of five percent is charged on unpaid tax still outstanding by March 3.
HMRC noted that although these penalties have been waived for the time being, interest will still be payable from February 1.
Sarah Coles, senior personal finance analyst at Hargeaves Lansdown adding that while this extension could be a lifeline for many it will come at a cost.
She shared: “There won’t be any penalties until the end of February, but you will start racking up interest on the 1st of the month, at 2.75 percent.
“If you’re worried about tackling the job because you’re not sure if you can afford to pay your bill, it gives you longer to work out where you stand, and if needs be, to set up a time-to-pay arrangement, to spread the cost.
“So don’t delay completing the form because you’re worried about paying it.”
Angela MacDonald, Deputy Chief Executive and Second Permanent Secretary of HMRC shared that these measures are to compensate for the added strain and pressure COVID-19 has placed on consumers and their finances.
She said: “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.”
Lucy Frazer, financial secretary to the Treasury commented: “Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.”
While this gesture of compassion, which was seen last year as well, has been done with good intentions some criticise the actual use of the relatively small extension.
Michael Fitch, Managing Partner at UHY Hacker Young noted: “The damage done to the self-employed since March 2020 has been huge, with subsequent lockdowns and re-openings.
“However, it is unlikely that taxpayers who can’t afford to pay their tax bill now will have suddenly found the money by the end of March.
“Kicking the can down the road for two months is not going to be much of a solution.”
Mr Fitch also noted the Time to Pay service may be more beneficial to set up now for those that will be going through financial hardships due to their tax bill.
This service allows individuals and businesses to spread their tax payments over time and can be used for self assessment taxpayers with up to £30,000 tax debt over 12 months.
Taxpayers can arrange Time to Pay once they have filed their 2020 to 2021 tax return.
Anyone who are in excess of £30,000 tax debt or may need more than 12 months to pay are encouraged to contact the Self Assessment Payment Helpline on 0300 200 3822.
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