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HMRC Gives more time to pay self assessment tax bill

HMRC have today (19 February 2021) confirmed that they will not charge Self Assessment tax payers the usual 5% late payment penalty, providing their tax bill is paid by 1 April 2021 or they have entered into a payment plan by that date. The 5% penalty is normally applied on 3 March.

However, interest will continue to accrue on outstanding tax bills from the date that payment became due i.e. 31 January 2021. In delaying the late payment fee the Government acknowledge the financial impact the pandemic is having.

The late filing penalty will still apply to outstanding 2019/20 tax returns that remain outstanding on the extended filing date of 28 February, previously extended from 31st January.

Taxpayers will now have until 1 April 2021 to pay their tax bills for the financial year 2019/20 in full, or make arrangements to pay their tax bill via monthly payments until January 2022.

Therefore, the new self assessment tax timeline for this year is as follows:

1. 31 January 2021: deadline for filing tax returns and payment of tax bill
2. 1 February 2021: interest at the rate of 2.6% starts to accrue on unpaid tax bill
3. 28 February 2021: last date to file any late tax returns to avoid late filing penalty
4 1 April 2021: last date to pay tax bill or set up a self-serve Time to Pay arrangement online*

*if tax bill exceeds £30,000, self assessment tax payers should contact HMRC directly via their helpline on 0300 200 3822.

The additional late payment penalties at 6 and 12 months (August 2021 and February 2022 respectively) remain in place.