Penalty deadline just two weeks away
HMRC allowed a generous relaxation of the rules surrounding penalties for late payment of tax for 2020/21. However, the deadline to act is fast approaching. What do you need to do if you owe tax for that year?
Usually, if you pay your balancing payment under self-assessment after 31 January, you'll be charged interest on the outstanding amount from 1 February. Furthermore, if anything remains unpaid 30 days later, a charge of 5% of the amount due is added to the bill. However, for 2020/21 there was a relaxation of this. The deadline to avoid a penalty for 2020/21 was moved to 31 March. But what you may not know is that a penalty can still be avoided if you can’t pay in full by this date. All you need to do is contact HMRC and agree a time to pay arrangement before the end of the month. No penalty will then be charged, as long as the arrangement is adhered to. Note that interest will still be charged from 1 February. Additionally, the penalty interest rate increased on 21 February 2022, from 2.75% to 3%.
You can make the arrangement via your personal tax account online, or by contacting HMRC on 0300 200 3822.
Related Topics
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
HMRC targets smaller tax debts
HMRC is stepping up collection of lower‑value tax debts, signalling a firmer approach to long‑overdue liabilities while encouraging earlier engagement. Direct recovery from bank and building society accounts has been re‑introduced on a trial basis, alongside a government consultation on HMRC powers and tax administration. What are the key points to be aware of?
-
New digital process for NI refunds
HMRC has introduced an online service to claim a refund of Class 1 NI contributions but not everyone can use it. What can you do if you've paid too much NI?