The tax office have reviewed a number of deadlines relating to tax because of the issues being caused by Covid 19. The effort is being made to help individuals and businesses at a difficult time financially.
HMRC have extended deadline for filing your self assessment tax return from the 31st January 2021 to the 28th February. Which meant that you could still get your paperwork to them without getting the usual, automatic £100 fine.
Now they’re building in some extra time for people to pay their 2019-20 tax bill.
Why are they moving the deadlines?
HMRC are making allowances for the restrictions and impact of COVID 19. Just like all of us, they’ve had to adapt to different working practices. And they appreciate that all kinds of difficulties prevent taxpayers from following usual procedures.
We all know that most businesses have taken a huge financial hit and a tax bill based on the previous year’s usual takings is an unachievable lump sum.
HMRC have their job to do, taxes still need to come into the Treasury, but they are being as understanding as possible with taxpayers.
What is the new tax payment deadline?
HMRC’s latest announcement is that you can avoid the 5% of your bill fine by paying by the new deadline. Usually, if you fail to pay by the tax return deadline (31st January) you get a £100 automatic fine. Then this 5% penalty is added if you’ve not paid by 3rd March.
To give people a bit of breathing space, this self assessment deadline is extended until 11.59pm on 1st April. By this time, you need to either pay your tax bill in full or set up a Time to Pay arrangement. If you’ve done this by 1st April, you’ll avoid the 5% fine.
However, you will still have to pay 2.6% interest on your outstanding tax bill from 1st February.
If you don’t meet this new deadline, the cumulative penalty system kicks in.
What is HMRC’s Time to Pay?
Basically, Time to Pay is a payment plan that gives you more time to pay your tax bill. You can set up monthly instalments between now and January 2022, to make paying your tax bill more manageable.
You can set up a Time to Pay arrangement online as long as you meet the following criteria:
- Your tax bill is under £30,000
- You’ve filed your self assessment tax return
- You don’t have any other debts or payment plans set up with HMRC
- It’s within 60 days of the payment deadline
You use your Government Gateway account to set up a Time to Pay plan, without needing to speak to an HMRC advisor.
If you don’t meet the criteria, or you’re unable to use the online portal, you can call the Self Assessment Payment Helpline on 0300 200 3822. This is available between 8am and 6pm on week days.
