Self-assessment tax fines for firms that missed the January 31 deadline have been waived by HM Revenue and Customs (HMRC) for one month.
Because of this, anyone affected by Covid-19 will have additional time to finish their 2020-21 tax returns and pay any required taxes.
Normally, failing to file your tax return by the 31st of January results in a cost of £100, with additional penalties if you wait more than three months.
According to HMRC, only 6.5 million of the 12.2 million taxpayers who are required to file their tax return by the 31st of January have done so.
The filing and payment deadline is still set for January 31, 2022.
As a result of the waivers,
- A late filing penalty will not be imposed if taxpayers file their return online by February 28.
- A late payment penalty will not be applied to anybody who pays their self-assessment tax in full or arranges a Time to Pay agreement before the deadline of 31 January.
Individuals and businesses may use Time to Pay to defer their tax payments if they so want. Once they’ve submitted their return, self-assessment individuals with tax debts up to £30,000 may do so online.
If payment is not received before 1 April, it will be subject to daily interest of 2.75 per cent and a 5 per cent fee.
According to Deputy Chief Executive Angela MacDonald of HMRC, “We recognise the challenges people and companies face this year as a result of Covid-19’s effect. Our decision to eliminate fines for one month for self-assessment taxpayers will allow them to complete their commitments without fear of a penalty,” said the Treasury Department.
The tax return for 2020 to 2021 includes all profits and payments made during the epidemic. Covid-19 support grants and payments received by businesses on April 5, 2021, must be declared on their Self-Assessment tax return.
- Self-Employment Financial Assistance Program
- Other Covid-19 grants and support payments, such as self-isolation payments, local authority grants, and those for the Eat Out to Help Out programme, are also included in the job retention programme.
“Self-assessment season is generally a very stressful time for freelancers and small company owners, so the news that penalty for late reporting would be waived in January will be a comfort for many individuals,” said Emily Coltman, head accountant of accounting software provider FreeAgent. Especially for people who have lately been affected by Omicron, a little breathing room will assist them in finishing their Self Assessment responses.
“However, this news should not lead to complacency. Putting off filing your tax return until February because the government has decided not to apply penalties in January is a mistake since you will still be faced with the same rush to finish it in February. Even though HMRC has postponed the penalty for late tax payments until April, they will still levy interest on any tax paid after January 31.”
“The current Covid wave will be hurting not only individuals who need to file, but accountants and others assisting the 51% of filers who employ an advisor and HMRC itself,” said Kevin Sefton, CEO of sole trader tax app unbound.