Keep the taxman happy

Now’s your last chance to file your self-assessment tax return without penalty, says Paul Lewis

Overhead View of Hand Filling Up Tax Form and Using Calculator and Laptop

If you are one of the two million people who missed the tax return self-assessment filing deadline of 31 January, make sure that you file by 28 February to avoid the
£100 automatic penalty.

Advertisement

Although the penalty trigger was delayed by a month, the 2019/20 return was still due on 31 January and by missing it you have already given HMRC an extra three
months – until the end of April 2022 – to open an enquiry into your form. So make sure you do not give it anything to enquire into. If you still do not have all your
figures finalised, put in a best estimate and indicate that on the form – it’s much better than not filing.

The deadline for the first instalment of tax to be paid was still 31 January, even though you may not have known how much tax was due. Interest started clocking up from 1 February. That is at the rate of 2.6% a year, so even on a £10,000 bill it only accrues at the rate of around 71p a day – about £20 if you pay it alongside putting
your form in on 28 February.

There is a bigger deadline two days later, though, that you can’t afford to miss. If you do not pay the tax you owed on 31 January before midnight on 2 March, you will incur a penalty of 5% of the tax owed. That will include your second payment on account for 2018/19 if you used the pandemic concession to delay it up to six
months from the due date of 31 July 2020. It also includes the first payment on account for 2019/20 – half the tax due in that year plus or minus any under- or over-payment in 2018/19.

If you expect your profits to be much lower in 2020/21, perhaps because of Covid, you can ask for your January payment to be reduced. Do that on the self-assessment form or search “reduce payment on account” at gov.uk.  And if you owe less than £30,000, you can automatically spread the payments over the next 12 months, if you’ve filed your 2019/20 tax return. Arrange that before 3 March and no 5% penalty will be charged. Simply see gov.uk and search “time to pay”

Advertisement

To ask Paul Lewis a questions please email paul.lewis@radiotimes.com Paul cannot answer your question personally but will endeavour to cover in his weekly column in Radio Times magazine.