HMRC temporarily waives late payment penalties

Self assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April, HMRC has announced

The payment deadline for self assessment is 31 January and interest is charged from 1 February on any amounts outstanding.

Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on 3 March. But this year, because of the impact of the Covid-19 pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up a monthly payment plan online at www.gov.uk. They need to do this by midnight on 1 April to prevent being charged a late payment penalty.

The online Time to Pay facility allows taxpayers to spread the cost of their self assessment tax bill into monthly instalments until January 2022.

HMRC recognises the pressure affecting taxpayers due to the pandemic, and encourages anyone worried about paying their tax and unable to set up a payment plan online to contact HMRC for help and support on 0300 200 3822.

More than 97,260 customers have set up a self-serve Time to Pay arrangement online, totalling more than £367m.

Jim Harra, HMRC’s chief executive said: ‘Anyone worried about paying their tax can set up a payment plan to spread the cost into monthly instalments. Support is available at gov.uk to help anyone struggling to meet their obligations.’

There are several ways that taxpayers can pay their self assessment tax bill in full. They can pay online, via their bank, or by post. Taxpayers should still pay in full if they can. This is the only way to stop interest accruing.

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 on Account.

Self assessment taxpayers who have yet to file their 2019-20 tax return should file by 28 February to prevent being charged a late filing penalty of £100.

Dawn Register, head of tax dispute resolution at BDO said: ‘This is an exceptional move from HMRC and a very welcome one as we are living in exceptionally difficult circumstances. This change will specifically support people struggling with their financial affairs, and offers additional and much-needed respite.

‘While taxpayers who owe HMRC less than £30,000 can swiftly set up a Time to Pay arrangement with HMRC using the online facility, those who owe more will need to organise a bespoke payment plan by phoning HMRC and may need to demonstrate their financial hardship. This can be time consuming and with the plethora of other challenges many currently face, further latitude is a pragmatic move from HMRC.’

HMRC is also warning taxpayers to be aware of copycat HMRC websites and phishing scams. Taxpayers should search ‘self assessment’ on gov.uk to get the correct link for their self assessment tax return online securely and free of charge. They also need to be alert if someone calls, emails or texts claiming to be from HMRC, saying that they can claim financial help, are due a tax refund or owe tax. It might be a scam. Check gov.uk for information on how to recognise genuine HMRC contacts.

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