Get your tax return done now! More than 5M last minute filers warned to make sure they pay their tax bill by the end of January
- Millions are being urged to pay their self-assessment tax bill by end of January
- There is now a £100 penalty for filing after the deadline
More than five million people are being warned not to be lulled into a false sense of security – and ensure they pay their self-assessment tax bill by the end of this month.
Last week, Revenue & Customs announced that a £100 penalty for filing a self-assessment tax return online after the usual end-of-January deadline is being waived provided the return is submitted before the end of February.
This effectively gives people an extra month to sort out their tax return before facing a fine.
However, those filing a self-assessment return must still hand over any tax due for the financial year to April 5, 2021, by the end of this month to avoid incurring extra costs.
Taxing: Postponing the completion of a tax return until next month will also make it nigh impossible for someone to pay their tax bill before the end of this month
From February, there will be interest charges of 2.75 per cent applied to any tax owed. There will be an additional 5 per cent charge if payment is delayed by a further two months.
Tax experts fear that the relaxation of the usual self-assessment rules may encourage people to delay paying the tax they owe, assuming that the end of February extension applies to both tax returns and payments.
Postponing the completion of a tax return until next month will also make it nigh impossible for someone to pay their tax bill before the end of this month.
Sarah Coles, an analyst at wealth manager Hargreaves Lansdown, says: ‘Although welcome news for those in a panic about having to file their tax return by the end of this month, the new deadline should not be seen as an excuse to put things off.
‘Do not be lulled into a false sense of security as the clock starts ticking from the start of February with interest being charged on any tax that you have yet to pay.’
The 5 per cent penalty for not paying tax due is usually levied for those who fail to meet a March 3 deadline. This year it is extended to April 1.
You can also avoid paying the 5 per cent penalty if you set up a ‘time to pay’ arrangement by the new deadline. This option allows taxpayers to spread tax owed of £30,000 or less over 12 monthly instalments.
Similar month-long extensions were introduced this time last year as a result of lockdown and concerns over financial hardship.
But because the extension does not delay the 2.75 per cent interest charge that is levied on your tax bill from February 1, the longer you wait to pay the more you will pay in interest.
So far only 6.5million of the 12.2million people who must file a self-assessment tax return have done so.
Revenue & Customs has granted the extension because of widespread disruption resulting from Omicron.
Huge numbers have been unwell and self-isolating – not just those who need to file returns, but also professionals such as accountants who often complete the forms on behalf of their clients.
Coles says: ‘By starting now rather than delaying, you not only save money from avoiding interest charges, but you also give yourself extra time to deal with thornier elements of the tax return.’
Dawn Register, head of tax dispute resolution at accountants BDO, is also concerned that those who delay filing their tax returns could lose out financially.
She says: ‘Although the latest Revenue & Customs announcement is a softening of the filing deadline, it is important to be aware the payment deadline remains the same.
‘So it is wise to get your tax return prepared right now – and if you have the funds available, pay by the end-of-January deadline.’
Revenue & Customs says: ‘We know the pressures individuals and businesses are again facing this year, due to the impact of Covid-19.
‘Our decision to waive penalties for one month for self-assessment taxpayers will give them extra time to meet their obligations without receiving a penalty.’