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Urgent warning to self-assessment taxpayers

Emma Lunn
Written By:
Emma Lunn

Self-assessment taxpayers have until 1 April 2021 to pay any outstanding tax liabilities in full or set up an online payment plan for the 2019 to 2020 financial year to avoid incurring penalty charges.

HMRC has warned people on self-assessment that they have just over a week to take action.

Last month, HMRC said that due to the impact of the Covid-19 pandemic, it was giving self-assessment taxpayers more time to pay their tax for the 2019-20 tax year or set up a payment plan.

To avoid a 5% late payment penalty charge, arrangements must be in place by midnight on 1 April 2021. Further late payment penalties are charged at six and 12 months (August 2021 and February 2022 respectively), on tax outstanding where a payment plan has not been set up.

Those who have yet to settle their liabilities for the 2019 to 2020 financial year can pay their tax bill or set up a monthly payment plan online at Gov.uk. Setting up a Time to Pay arrangement allows taxpayers to spread the cost of their self-assessment tax bill up to £30,000 into monthly instalments until January 2022.

Almost 117,000 taxpayers have already set up a self-serve Time to Pay arrangement online, totalling more than £437m.

However, there is no change to the payment deadline and other obligations are not affected. This means that the tax payment deadline remains 31 January 2021 and interest will be charged on late payment. The current rate of late payment interest is 2.6%.

Self-assessment taxpayers who are required to make ‘payments on account’ and know their 2020/21 tax bill is going to be lower than in 2019/20 – for example due to loss of earnings because of COVID-19 – can reduce their payments.

HMRC is also warning taxpayers to beware of copycat HMRC websites and phishing scams. Taxpayers should search ‘self-assessment’ on Gov.uk to get the correct link for their self-assessment tax return online securely and free of charge.

They also need to be alert if someone calls, emails or texts claiming to be from HMRC, saying that they can claim financial help, are due a tax refund, or owe tax, as it might be a scam.

If your self-assessment debts are more than £30,000, or you need longer to pay a debt in full, you can’t set up a Time to Pay arrangement online. However, you might still be able to set up a Time to Pay arrangement by calling the self-assessment helpline on 0300 200 3822.