Just like last year, HMRC has made a few changes in the coming Self Assessment deadline. However, these changes aren’t like the previous year’s. If you’re planning to file your tax return for 2020/21, This is everything you should know!
What HMRC reported
January 6 of 2022 was when HMRC declared that there would not be penalties for late filing for those who file the tax return 2020/21 online when they file before February 28 2022. Also, there will be no penalty for late payment for those who pay their tax bill (or create an agreement to pay your tax bill) on or before April 1 2022.
The standard penalties will be reinstated from March 1 2022, to April 2 2022, for filing and payment. Beginning on February 1, 2022, you’ll be charged for interest as usual.
What was the reason HMRC delayed the date?
In the statement, HMRC explained that they’re trying to reduce the financial burden of agents and taxpayers, which has been exacerbated by COVID, mainly due to the Omicron variant.
Look over this table to understand the way it works:
|Filing date||Payment date||Penalty(filing)||Penalty(payment)||Interest|
|Before 31st Jan||Before 31st Jan||PS0||PS0||No|
|Before 28th Feb||Before 28th Feb||PS0||PS0||Yes|
|1st March from now onwards||Before 1st April||PS100||PS0||Yes|
|1st March to the end of March||From April 2nd to April 30th||PS100||5 percent of bill||Yes|
For more on tax return penalties, read the late tax return guide.
What’s the issue with interest?
Although filing late and paying later may seem like a good alternative, you’ll be charged interest if you make payments after the January 31 deadline. Interest rates are 2.6 per cent APR, which is the usual rate for late payment. Finish your paperwork in time to avoid paying this cost unnecessarily.
What does 2.6%APR refer to?
APR or Annual Percentage Rate refers to an annual rate. The 2.6 per cent interest rate charged by HMRC amounts to approximately 0.2 per cent of your tax bill if you file your tax return by February 31, 2022.
Include COVID grants
If you do decide to file, be sure to include these items on your tax returns if you claimed them in the tax year 2020/21
- Self Employment Income Support Scheme grants
- COVID-19 job retention scheme
- Other Coronavirus grant and support payments, such as self-isolation payment as well as local authorities grants
All of these are considered regular income and are taken into account when calculating your bill. HOWEVER, the PS500 one-time payment for working households who receive tax credits can be left off.
Should you file it later?
When to file is entirely up to you; however, we’d suggest not putting off filing unless you need to.
If you fail to do so, you’ll have an additional fee on your bill that you could have avoided. Take the deadline of January 31 the way you usually would have done.
However, if you’re having difficulty paying your tax invoice, contact HMRC promptly. You might be able to arrange an arrangement for payment to pay for your cost. You can also click here to get general guidance on how to complete your Self Assessment.
If you’d like to learn more regarding your UK tax liablities contact us today.