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Self Assessment: Can I pay my 2020/21 tax return bill late?

Money Matters

Self Assessment: Can I pay my 2020/21 tax return bill late?

HMRC has announced that, as a temporary measure for the 2020/21 tax year, it will be possible to submit your Self Assessment tax return and some associated forms as late as midnight on 28 February 2022 without incurring a penalty.

Additionally, those that use Self Assessment won’t be charged an initial 5% late fee if – before 1 April 2022 – they either pay in full their taxes that are due, or contact HMRC to create a Time to Pay arrangement to pay the bill in instalments.

These measures mirror those offered in January and February 2021.

Back then, HMRC said the measures are because of the “immense pressure that many people are facing in these unprecedented times”.

Covid has caused significant disruption, and may result in people being late submitting their Self Assessment tax returns and paying their tax, despite their best efforts.

In this article, we cover what HMRC’s announcements mean for you and the steps you can take now.

Here’s what we cover:

What is the Self Assessment extension?

Can I pay my 2020/21 tax late?

Why has HMRC made these decisions?

Final thoughts

HMRC made it clear that those who could meet the 31 January 2022 online deadline to submit their 2020/21 Self Assessment tax return should have done so.

If required, they should have also submitted the SA800 (Partnership Tax Return) and SA900 (Trust and Estate Tax Return) online by that date too if paper copies hadn’t been submitted to meet the 31 October 2021 postal deadline.

Paper submissions of forms SA700 (Non-resident Company Income Tax Return) and SA970 (Tax Return for Trustees of Registered Pension Schemes) sent as part of the online Self Assessment process should have also arrived by 31 January 2022.

Typically, if the 31 January deadline is missed by up to three months then you incur an automatic fine of £100.

There are larger fines if your Self Assessment tax return is submitted even later than this.

Sometimes the fines are waived if you’ve a good excuse for filing late, but that involves speaking to HMRC first and making your case.

HMRC’s announcement in January 2022 means that, for the 2020/21 tax year’s Self Assessment return, it’s waiving the mandatory £100 fine – provided the return is submitted online by midnight on 28 February 2021.

The SA800 and SA900 should also be submitted online by this date, while if you need to submit SA700 or SA970 forms by post then they should be received by HMRC by that date too.

In other words, it isn’t accurate to say HMRC had extended the deadline. It’s just not penalising those who submit up to a calendar month late.

As such, there is no need to apply to HMRC to make use of this measure, or seek permission first.

You simply have to submit your 2020/21 Self Assessment return and certain other required documentation by 28 February 2022 if you wish to avoid fines.

All those registered for Self Assessment should have paid their tax by 31 January.

If you don’t then, in theory, an automatic 5% late-payment penalty is applied. Additionally, interest starts to accrue from 1 February onwards.

However, HMRC has announced that the 5% penalty will not apply for the 2020/21 tax year Self Assessment return tax bill, provided one of two things occurs before midnight on 1 April 2022:

  1. You pay your Self Assessment tax bill.
  2. You set up a Time to Pay plan.

Notably, interest will still continue to accrue even though the penalty doesn’t apply. However, at a rate of 2.75% on the amount you owe, this shouldn’t be a significant burden if either of the two options are applied before 1 April 2022.

Time to Pay is an arrangement that can be reached with HMRC where you agree to pay your taxes late, by up to 12 instalments.

You don’t necessarily have to speak to anybody at HMRC, and can set up a payment plan online. But you do need to take action and it isn’t automatically applied.

To use Time to Pay, you need to owe £30,000 or less, and your tax returns must be up to date. You also can’t have any existing payment plans or debts with HMRC.

This move follows an identical offering from 2021.

HMRC monitors the coronavirus disruption and although it says more than 6.5 million people have already used Self Assessment this year, it clearly believes there’s a risk of late filing and payments this year too.

The advice from both HMRC and accountants is always to submit your Self Assessment well ahead of time, and ensure you pay your taxes on time.

Considering that most people using Self Assessment have all the information they need at the end of the tax year each April, waiting until 31 January the following year is considered to be taking an unnecessary risk.

However, in these extraordinary times, it’s clear that normal patterns have been disrupted.

The announcement of the easing of the late penalty until 28 February 2022 was just what many people needed, and the removal of the 5% penalty will be welcome by others paying their bills a little later than they would like.

Editor’s note: This article was first published in January 2021 and has been updated for relevance.

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