If you have not yet filed your self-assessment, the February extension gives you more time, but interest will still be added starting immediately.
To the relief of many and with just days to go before the official 31 January deadline, HMRC granted a much-needed reprieve. It was announced that the usual £100 fine for late submission of tax returns would not apply this year as long as returns were made before 28 February 2021.
While millions of people will have filed their self-assessment in advance of the deadline, this more lenient approach will be a weight off the shoulders of those who didn’t quite make it time for the official deadline. We can only assume that HMRC finally accepted the financial challenges and difficulties faced by self-assessment taxpayers this year as a result of the ongoing pandemic.
Interest and Surcharges
However, for anyone who has chosen to take advantage of the delayed filing date, it should be noted that their tax bill is now effectively overdue and will incur interest on any outstanding balance from 1 February. Daily interest of 2.6% will apply, in addition to a 5% surcharge should tax still be outstanding by the 2 March.
Time to Pay
Anyone who is unable to pay by the new February deadline, can still request that they spread their bill over (up to) 12 months. Known as a ‘Time to Pay’ arrangement, it’s possible that this tax year will see more taxpayers take advantage of this facility, although those who do will still need to file their 2019/2020 returns in advance of putting the arrangements in place.
Changes have also been made to the eligibility thresholds this year, with the Time to Pay service now available to those with tax liabilities up to £30,000 (an increases on the previous limit of £10,000)
Time to Pay can be applied for online, for bills up to £30,000. Anyone whose tax bills exceeds £30,000, or who needs additional time beyond the usual 12 months, will need to call HMRC to discuss their arrangements.
Further details regarding this year’s amended arrangements for self-assessment can be found on the HMRC website.
Alternatively if you have not yet filed your self-assessment and need help or advice, don’t delay getting in touch with our team who will be happy to provide support to ensure you meet the new February deadline and minimise your interest charges.