Individuals granted an extension to submit their tax return by 28 February face a 5% late payment penalty.
Around 1.8m individuals are set to benefit from a hard-fought campaign which encouraged HMRC not to charge a late filing penalty – provided they submit their return online by 28 February. HMRC has confirmed that the initial 5% late payment penalty on self-assessed tax won’t be charged if the tax is paid, or a time to pay arrangement is agreed, by 1 April*.
It is important for these and many other taxpayers that they pay any outstanding balance, or arrange a payment plan, before 1 April 2021* to avoid a 5% late payment penalty. For a time to pay arrangement you need to know the amount of tax due hence filing the return and agreeing payment plan.
As a reminder, anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via GOV.UK provided they meet the following requirements:
they have no: – outstanding tax returns – other tax debts – other HMRC payment plans set up
the debt needs to be between £32 and £30,000
the payment plan needs to be set up no later than 60 days after the due date for payment – but they should really do it as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty.
Those who do not meet these requirements, or who need more than 12 months to pay off their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.
*Editor's note: When this article was first published on Friday 19 February, the deadline was 3 March. The article has been edited on Monday 22 February to reflect the amended deadline of 1 April 2021.