No Late-Filing Penalties Until March? Why Now Is Still The Time To File

HMRC recently announced that they wouldn’t be charging late-filing penalties for 2019/20 tax returns filed on or before 28th February 2021. However, this has led to some confusion over when you should file. The reality is…

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HMRC recently announced that they wouldn’t be charging late-filing penalties for 2019/20 tax returns filed on or before 28th February 2021. However, this has led to some confusion over when you should file.

The reality is that any tax due for the year was still due by 31st January 2021. This includes the payment on account monies you may have owed if you deferred it in July 2020. HMRC started charging interest from the 1st February on any late payments.

That’s why we’re encouraging all those who need to file a tax return to file now – otherwise, you’ll be gaining interest every single day. Here, we explain why in more detail.

When do I need to pay my tax?

Any outstanding tax for 2019/20 was still due on 31st January 2021. In order to pay it, you’ll need to calculate how much tax you owe – and the only way to do that is to file your tax return.

If you file after this date, but on or before 28th February 2021, it’s still considered a late return despite HMRC not issuing a penalty. This enables HMRC to charge you the 2.6% interest for missing the original payment deadline as well as enquire into your tax return for a longer period after you’ve submitted it.

Additionally, if you claim tax credits and you gave HMRC an estimated income before 31st July 2020, then you would have still needed to report your actual income figures by 31st January 2021. HMRC have stated that “in most cases” they will update the income. However, you run the risk of losing support.

The same is true for any benefits you need to claim, which depend on having paid Class 2 National Insurance contributions. To reduce the chance of your claim being affected, you’ll need to ensure that the contributions are paid as soon as possible as part of your Self Assessment balancing payment.

What happens now that I’ve missed the payment deadline?

Besides the 2.6% interest you’ll have incurred since 1st February 2021, you’ll be subject to the following late-payment penalties depending on how much time has elapsed:

DatePenalty
After 1st April5% of your total tax bill and interest for this period
6 months after the payment was dueAnother 5% of the tax due and interest for this period
12 months after the payment was dueAn additional 5% of the tax owed, plus interest for this period

If you’re not able to pay the full tax bill amount, let HMRC know as soon as possible. You may be able to set up a payment plan to spread the cost. You can only do this if:

  • Your tax bill is £30,000 or less
  • You don’t have any other HMRC payment plans or debts
  • Your tax return is up to date
  • It’s less than 60 days after the payment deadline

What happens if I miss the February filing deadline?

If you still miss the filing deadline, HMRC will fine you the usual immediate £100. And instead of having a three-month buffer period until daily penalties are issued, you’ll have to start paying £10 per day from 1st April 2021. From there, you’ll be charged £300 or 5% of the tax due if you still haven’t submitted after six months.

That being said, if you have what HMRC refers to as a ‘reasonable excuse’, you may be able to appeal the penalties. One such reasonable excuse is if disruption caused by COVID-19 has meant that you’ve been unable to file.

This may be because you’ve been in hospital or your business has been hit substantially by the pandemic. Whatever the case may be, the circumstances need to have occurred before the original filing date of 31st January 2021. Otherwise, it won’t be counted as a reasonable excuse.

What should I do now?

File as soon as you can – it’s the best way to avoid the interest accruing further. It doesn’t have to be overwhelming either; you can make the submission process stress-free with GoSimpleTax.

Our platform allows you to record your finances in real-time to get an up-to-date view of your tax bill. What’s more, you can forget navigating HMRC’s portal and file your completed tax return straight to them with a full GoSimpleTax account.

Why risk the penalties? See how easy it is to file through GoSimpleTax today.

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