The tax authorities are not known for their leniency; however, the Covid-19 pandemic has hit the world hard and the government has introduced a number of measures to help those who might be struggling as a result. A handful of these measures relate to the filing of self-assessment tax returns and payment of the associated tax bills. Read our latest article below to find out what help is available...
What are HMRC doing to help?
The first measure of help HMRC introduced was to extend the filing deadline for self-assessment tax returns from the usual date of 31st January to 28th February 2021. This gave an extra four weeks to file the return and avoid the £100 late filing penalty. Figures are not yet available on how many returns were submitted during the extension. When announced, this extension only applied to submission of the return; the tax payable was still due on 31st January 2021.
During February, on 19th of the month, the government made a further announcement regarding the payment of tax, giving an extension until 1st April for outstanding tax to be paid or a payment plan to be set up before the 5% penalty would be charged. The 5% fee is usually implemented on 3rd March, so another four-week extension has been granted.
However, whilst taxpayers may have been given a short reprieve from penalties, they are not to be let off the interest charges which accrue daily at 2.6%. Further 5% penalty charges are still in place for 31st July 2021 and 31st January 2022 if tax remains unpaid.
So, what should you do? At this point, you are likely to find yourself in one of four situations:
- You have submitted your tax return and paid your tax on time.
- You have submitted your tax return on time but have not paid your tax.
- You have not submitted your tax return but have made some payments on account for your tax.
- You have not submitted your tax return or paid any tax.
The best way of saving money and not paying more than you should is to file your return and pay your tax on time, so if you are in the first situation, you have nothing left to do until the end of the next tax year when you will have to go through the process again.
If you are in the second situation, submitting your return on time means that you have avoided the £100 late filing penalty and you know exactly how much tax you owe. If you cannot pay it all, pay what you can to lower your interest payments and get in touch with HMRC to set up a payment plan for the rest.
If you are in the third situation, get your return filed as soon as possible. The return will calculate exactly how much tax you owe, so you can find out if you need to pay more tax or if you have overpaid, submitting the return will trigger a rebate. If you need to pay more and want to set up a payment plan, you must file the return first. HMRC won't set up a payment plan based upon estimated figures.
If you are in the fourth situation, you have it all to do. Get the return filed as soon as possible so you know exactly what you are dealing with in terms of tax owed. It may be that you haven't submitted or paid because you are sure you don't owe any tax, but HMRC doesn't know that until they get your return. If you haven't submitted before 28th February you will have £100 late filing penalty to pay, and if you want to set up a payment plan for any tax owed, you will be able to do that once your return is filed.
Questions? We can help!
Get in touch with us, let us help you! Our team of tax experts can offer business advice and help you maximise your tax efficiency. Contact our Director, Nick Bonnello, today on 0115 964 8860 or email him at firstname.lastname@example.org tofind out how we can help you across all areas of your business.
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