Self Assessment Penalty Waivers

As you may know January is self assessment month, Self-assessment is a way of reporting your income and paying and or being refunded Tax from HMRC.

If you are employed, your income tax is usually automatically deducted from your wages by your employer. But if you are self-employed or you receive any other income, you are required to submit a self-assessment tax return each year.

The deadline to file and pay remains 31 January 2022 but to assist with submission due to the ongoing pandemic HMRC are continuing to provide support during COVID 19 and have announced that they will not charge

• Late filing penalties for those who file online by 28‌‌ ‌February 2022.

• Late payment penalties for those who pay the tax due in full or set up a payment plan by 1‌‌ ‌April 2022

This will give us the additional time if we need it and will operate in the same way as the equivalent waivers did last year. However, HMRC are encouraging us to file and pay on time if we can – almost 6.5 million have already done so.

Their Time to Pay options are still available to assist customers. Once we have filed your 2020-21 tax return, (if needed) you can set up an online payment plan to spread a Self Assessment bill of up to £30,000, over and up to 12 monthly installments.

The payment deadline for Self Assessment is 31‌‌ ‌January and late filing penalties won't be given to those who file online by 28‌‌ ‌February 2022

Normally HMRC would have added a 5% late payment penalty on any unpaid tax that is still outstanding on 3‌‌ ‌March but, like last year, this year HMRC are giving you more time to pay or set up a payment plan if you need to.

Self Assessment clients will not be charged the 5% late payment penalty if you pay your tax or set up a payment plan by midnight on 1‌‌ April.

You can pay your tax bill or set up a monthly payment plan online at GOV.‌‌UK

There is no change to the filing or payment deadline and other obligations are not affected.

This means that:

• interest will be charged on late payment. The late payment interest rate from 4 ‌‌ ‌January 2022 is 2.75%

• a return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness. This means that there will be an extended enquiry window for returns filed after 28‌‌ ‌February the other late filing penalties (daily penalties from 3 months, 6 and 12 month penalties) will operate as usual

• a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1‌‌ ‌April 2022. Further late payment penalties will be charged at the usual 6 and 12 month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up

HMRC have advised that they will not charge late filing penalties for SA700s and SA970s received in February – these returns can only be filed on paper.

For SA800s and SA900s they will not charge a late filing penalty if customers file online by the end of February – the deadline for filing SA800s and SA900s on paper was 31‌‌ ‌October.

Customers who file late on paper will be charged a late filing penalty in the normal way, you can then appeal against this penalty if you have a reasonable excuse for filing the paper return late.

Self-employed customers who need to claim certain contributory benefits soon after 31‌‌ ‌January 2022, need to ensure your annual Class 2 National Insurance contributions (NICs) are paid on time – this is to make sure your claims are unaffected. Class 2 NICs are included in the 2020 to 2021 balancing payment that is due to be paid by 31‌‌ ‌January 2022.

It’s worth noting that benefit entitlements may be affected

• if you can't pay your balancing payment by 31‌‌ ‌January 2022

• if you have entered into a Time to Pay arrangement to pay off the balancing payment and other self assessment tax liabilities through installments.

Affected customers should contact HMRC on 0300‌‌ ‌200‌‌ ‌3822 for help as soon as possible on this.