You are here: Home - Household Bills - News -

HMRC to waive 5% late payment penalty

0
Written by: Emma Lunn
22/02/2021
HMRC has announced that self-assessment taxpayers won’t be charged the March 5% late payment penalty if pay their tax or set up a payment plan by 1 April 2021.

The payment deadline for self-assessment is 31 January and interest is charged from 1 February on any outstanding amounts.

A 5% late payment penalty is also normally charged on any unpaid tax that is still outstanding on 3 March. So if you owed £1,000 in tax this fee would be £50.

But this year, because of the impact of Covid-19, HMRC is giving taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up a monthly payment plan online at Gov.uk. They need to do this by midnight on 1 April to prevent being charged the 5% late payment penalty.

However, taxpayers should still pay in full if they can. This is the only way to stop interest accruing.

While March’s late payment fines have been waived, interest began accruing daily on any unpaid tax from 1 February and this will continue building up until the bill is repaid in full. This interest is charged at a rate of 2.6% – meaning if you paid a £1,000 tax bill a year late, you’d pay £26 in interest.

The 5% late payment penalty fee will still be charged after 1 April, and again on six months and 12 months.

Due to the pandemic, HMRC had already agreed to waive the usual £100 late-filing penalty, as long as tax returns are filed by 28 February 2021.

Time to Pay

The online Time to Pay facility allows taxpayers to spread the cost of their self-assessment tax bill into monthly instalments until January 2022.

More than 97,260 taxpayers have set up a self-serve Time to Pay arrangement online, totalling more than £36m.

Jim Harra, HMRC’s chief executive, said: “Anyone worried about paying their tax can set up a payment plan to spread the cost into monthly instalments. Support is available at Gov.UK to help anyone struggling to meet their obligations.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week