HMRC axes late payment penalties
HMRC have announced further measures to help business owners and the self-employed recover from the financial fallout of the coronavirus outbreak: this year’s self-assessment late payment penalties are to be scrapped.
Individuals filling self-assessment tax returns will now not be charged the standard 5% late payment penalty. This is provided they pay their liabilities by 1 April or make a ‘time to pay’ arrangement with HMRC by the same date. This deferral could allow businesses to use that money to improve cash flow and keep their firms afloat whilst there is reduced economic activity.
This is in addition to the month-long extension for filing your self-assessment tax return granted by HMRC earlier this year. This gave self-assessment tax-payers until 28 February to lodge their online tax returns, without being hit by the usual £100 late filing fee.
Will I be charged interest?
However, in both cases, interest at 2.6% per annum will still be charged from 1 February. You may therefore still be better off paying what you owe on time, rather than accruing unnecessary costs.
Setting up a payment plan
Payment plans or payments in full must be in place by midnight on 1 April to avoid the 5% penalty. Self-assessment penalties will again come into effect at the end of August 2021 and February 2022.
HMRC are effectively offering to spread tax liabilities across monthly instalments until January 2022. This is available to those who owe up to £30,000 and have filed their return.
If you are unsure of what you owe to HMRC, it is better to make an estimated payment now, adjusting it later once you have your final liability figure.
We are here to help
If you would like to talk to a qualified accountant or tax specialist about these measures, or any other financial matter, then please do not hesitate to get in touch.