HMRC to waive 5% late payment penalty
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.”