5% late penalties apply from 1 April 2021

Self-Assessment taxpayers that failed to pay their outstanding tax liabilities or set up a payment plan by midnight on 1 April 2021 will be charged a 5% late payment penalty charge.

Under the normal rules a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March 2021. This extension was put in place due to the impact of the COVID-19 pandemic and gave taxpayers an extra 4 weeks to sort out their affairs before the 5% late payment penalty was levied.

Interest will also have been applied to any balance that was outstanding from 1 February 2021. The only way to stop further interest amassing is to pay any tax due in full. The current rate of late payment interest is 2.6%

If you are unable to pay your tax bill, then there are a number of options for you to defer the payment that was due on 31 January 2021. This includes an option to set up an online time to pay payment plan to spread the cost of tax due in monthly instalments until January 2022. This option is available for debts up to £30,000. If you owe Self-Assessment tax payments of over £30,000 or need longer than 12 months to pay in full, you can still apply to set up a time to pay arrangement with HMRC, but this cannot be done using the online service.

Further late payment penalties will apply if tax remains outstanding (and no payment plan has been set up) for more than 6 months after the 31 January filing deadline. From 1 August 2021 you will be charged a penalty of the greater of £300 or 5% of the tax due. If your return remains outstanding one year after the filing deadline, then further penalties will be charged from 1 February 2022.

You can appeal against any penalties that have been issued. However, you need to act fast, and the excuse must be genuine and HMRC can of course ask for evidence to support any claim. An appeal must usually be made within 30 days of receipt of the penalty.

Source: HM Revenue & Customs Tue, 30 Mar 2021 00:00:00 +0100

Latest articles

Notifying cessation of self-employment

Any taxpayers that have ceased to be self-employed must notify HMRC of their change in status. There are a number of steps that must be followed if a taxpayer ceases trading as a sole trader or if they are ending or leaving a business

Submitting CIS nil monthly returns

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’ and should be

Check employment status for tax

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector.

The service provides HMRC’s view if IR35 legislation

Class 1A payment deadline

Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. There is no employee contribution payable. If you provided taxable benefits to staff or directors your business is likely to have a