HMRC 2021 Tax Return Filing and Payment Penalties Announcement: Where is the CATCH?


The standard deadline for individuals filing a tax return is 31 January and failure to meet this deadline usually means a £100 automatic penalty applies, even if no tax is owed, however, at the beginning of this month, HMRC announced that late filing and late payment penalties will be waived for one month for Self Assessment Tax Return submissions and even longer for Self Assessment Tax bill payment.


What Does This Mean?

Anyone who cannot file their return by the 31 January deadline  will not receive an automatic £100 late filing penalty ☝🏾if you file it online by 28 February;


Anyone who cannot pay their Self Assessment tax by the 31 January deadline will not be charged a late payment penalty (5%) ☝🏾 if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.


But Where is the Catch?

Well… technically you may have gained some time, HOWEVER, a late payment interest (2.75%) will be charged from 1 February if the tax has not been paid by the 31 January deadline. 

Care is needed where the taxpayer is self-employed - especially if 2020/21 is the first year of trading. Class 2 NI is collected via Self Assessment but administered by a separate department. Late payment of the Class 2 NI liability can put entitlement to certain benefits payments at risk. 

So If you are Self Employed and claiming benefits, please contact HMRC to make a separate payment of your Class 2 NI to avoid problems. 


But, What If I Can’t Pay My Tax Bill in Full?

Right… So you’ve submitted your Self Assessment Tax Return for 20/21 and ‘’BOOM’’ your Tax bill is higher than you expected or budgeted! 

What to do Now?

First of all… don’t panic!!

Once you have filed your 2020/21 Tax Return, you can set up an online Time to Pay arrangement to spread the Self Assessment bill over up to 12 monthly instalments.

Taxpayers with Self Assessment debts of more than £30,000, or who need longer than 12 months to pay, may still be able to set up a Time to Pay arrangement by calling the Self Assessment Payment Helpline on 0300 200 3822.


If you later discover that you have made an error and overpaid tax, you may be entitled to claim it back  - Just get in TOUCH and we will help you!


From My Business to Your Business

We all would like a lighter tax bill, so If you haven’t submitted your Self Assessment Tax Return yet, or would like to have it reviewed, get in touch today and we will ensure that you don’t end up paying more tax than you need to.


You're very welcome to get in touch with Grace Certified Accountants if you have any questions.  Book a Free Call directly into my diary HERE.


Speak Soon!


Dora Ngoma


Director & Managing Partner

Grace Certified Accountants


Please check out my other blogs for more advice on how to run your bookkeeping and accounts smoothly.  Also take a look at us on Facebook, LinkedIn, Youtube Channel and Instagram for more valuable insights.