Self Assessment: why stick as close to the 31 January 2023 filing deadline as possible, despite HMRC waiving the rules?

Struggled to complete your Self Assessment tax return ahead of the midnight 31 January online-filing deadline? You’re not the only one. According to HMRC, some 2.3 million taxpayers have yet to file their 2020/21 Self Assessment tax returns.

HMRC acknowledges that COVID-19 could be a key reason, which is why it has again decided to help sole traders and others by waiving Self Assessment late-filing and late-payment penalties for one month. If you declare income via Self Assessment, effectively, you have up to a one-month filing extension for your 2020/2021 tax return and an additional month to pay any tax you owe.

However, HMRC is still encouraging you to file your 2021/22 Self Assessment tax return and pay any tax due as close as you can to the midnight 31 January deadline, and there are many good reasons why you should listen to that advice.

Why file as close to the 31 January deadline?

Filing your tax return after midnight on 31 January 2023 means you’ve filed late – the deadline hasn’t changed. It’s a bad habit to get into. Being a habitual late filer/payer can encourage HMRC to take a closer look into your income and tax affairs.

If you have the information and time now to complete and file your 2021/22 Self Assessment tax return, do it as soon as possible, because unforeseen things could crop up as February progresses, which could mean you miss the midnight 28 February deadline. What if you became ill or your business or personal life suddenly became much busier and you had less time?

It’s much better to get it off your plate so you have one less headache to worry about, then you can focus on other demands. Why delay things unnecessarily? What’s more, filing after 28 February will result in an immediate £100 penalty and appealing this could prove tougher after you’ve effectively already been given a month’s grace.

If you’re delaying because you don’t have all of the information you need to complete your 2021/22 Self Assessment tax return, you can submit provisional or estimated figures and amend them once you have the actual figures.

There’s also a very good reason for paying any tax due as soon as possible. Late payment interest (2.75%) is payable from 1 February – there’s no change to interest rules – so paying any tax you owe, if you can afford it, will work out cheaper. Why pay unnecessary interest payments?

Finally, some state benefits are reliant upon prompt payment of National Insurance contributions (NICs). Late payment of NICs because you haven’t filed your Self Assessment tax return on time can cause later cause issues that can be easily avoided.

Need to know! Just because HMRC is waiving the rules, effectively allowing you to delay filing your Self Assessment tax return, doesn’t mean you shouldn’t still file online as soon as possible.

Rules waiver – key facts

• The deadline to file your 2021/22 Self Assessment tax return and pay any tax payable remains midnight on 31 January 2023
• But if you did not file your 2021/22 Self Assessment tax return by midnight on 31 January 2023, you won’t have to pay a late-filing penalty (normally £100 as soon as late) – as long as you complete and file your 2021/22 Self Assessment tax return before 28 February 2023.
• After 28 February usual penalties apply.
• If you didn’t pay tax due by the 31 January deadline, you won’t have to pay a late-payment penalty if you pay in full or you set up a Time to Pay arrangement (see below) before 1 April 2023.

Time to Pay 

Since 5 April 2021, more than 30,000 taxpayers have used the self-serve Time to Pay service. Time to Pay can provide individuals and businesses with the option to pay Self Assessment tax owed in instalments rather than larger, less affordable payments. 

As explained on government website Gov.uk: “If you can’t pay your Self Assessment tax bill, you can make your own Time to Pay arrangement via your Government Gateway account, if you:

• have filed your latest tax return
• owe less than £30,000
• are within 60 days of the payment deadline
• plan to pay your debt off within the next 12 months or less.”

You should call the Self Assessment helpline (0300 200 3822 Mon-Fri 8am to 6pm except public holidays) if you cannot make your own Time to Pay Arrangement online, for example, if you owe more than £30,000 or need more time to pay.

Need to know! If you received grants or payments from government COVID-19 financial support schemes (eg the SEISS, local authority grant, etc) in the 2020/21 tax year, you’ll need to report them via your Self Assessment tax return.

• Struggling with Self Assessment? We can help you. GoSimpleTax offers you an easier way to complete and file your Self Assessment tax return – all for as little as £49. For added peace of mind, why not get your Self Assessment tax return checked by one of our experts? It can ensure that your tax return is error-free and that you’re minimising your tax bill by claiming all of your allowable expenses.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.