Self Assessment Tax Returns – beware of interest charges with the extended 28 February deadline

Self Assessment Tax Returns were in the news last week as HMRC announced that the automatic penalty for not filing by the 31 January deadline will be waivered for those that now file it by 28 February 2021.

However, taxpayers looking to delay submission should be aware that other charges and penalties will still apply, so are advised to submit and pay their Self Assessment as soon as possible.

The automatic penalty for not filing a Self Assessment Tax Return by 31 January is £100. However, in addition to this, interest is charged by HMRC on all tax outstanding from 1 February and this is backdated in situations where a tax return is filed late.

What are the penalties and interest charged on a late Self Assessment tax return?

An initial penalty of £100 is charged on any late tax return (In 2021 this applies to Self Assessments filed after 28 February). Additional penalties are charged for further delays to submissions, together with interest on any tax outstanding (calculated from 1 February). These are summarised as follows:

Fines & penalties for submission of a late Self Assessment tax return

  • 28 February: £100 fine from the 28 February in 2021 (this is usually automatically after the 31 January filing date, but has been postponed for 2021)
  • 1 May: £10 a day fine up to a maximum of £900 (90 days) for every day it is late (this is 3 months after the 31 January filing date)
  • 1 August: The greater of a £300 fine or 5% of the tax owing, (this is six months after the 31 January filing date)
  • 1 February: The following year – the greater of £300 fine or 5% of the tax owing (12 months after the 31 January filing date)

In addition to these, there are also fines and penalties for the late payment of tax:

Fines & penalties for late payment of tax

  • 1 March: 5% charge on the tax owing on that day – (payment 30 days late from the 31 January filing date)
  • 1 August: 5% charge on the tax owing on that day (payment 6 months late from the 31 January filing date)
  • 1 February the following year: 5% charge on the tax owing on that day (payment 12 months late from the 31 January filing date)

For all the above days, the cut off for penalties/interest is midnight on the date stated. Interest is currently by HMRC at charged at 2.60% (correct as of 1 February 2021)

Filing your Self Assessment tax return as soon as possible

For anyone who is still yet to file their Self Assessment Tax Return (and HMRC estimate that 1.8 million taxpayers missed the payment date) it is advised to submit it as soon as possible, to minimise any late payment charges or interest.

Anyone who has not yet paid their Self Assessment tax bill will now be incurring interest on the outstanding balance (whether the tax return is submitted or not) and is advised to pay their bill as soon as possible.

A 5% late payment penalty will be charged on 3 March for anybody with tax outstanding, or who has not arranged a repayment plan with HMRC.

If you are not able to file your tax return, paying an estimated amount as soon as possible will minimise any interest and late payment penalties, however, we always recommend filing it as soon as possible. For a no-obligation quote for assistance with a submission, or to estimating the amount of tax due, please contact us.

Assistance for those who may be struggling with paying their tax

If you are struggling to pay your Self Assessment tax bill, you may be able to pay by instalments. For those with total liabilities up to £30,000, that have been impacted by COVID-19, this can be done automatically online, when completing your tax return.

For payments over this amount, or requiring longer to pay, HMRC should be contacted directly. More information on Time to Pay can be found in our article here

How Alexander & Co can assist

We can provide a corporate or personal tax advisor to help guide you through everything you need to know when it comes to navigating tax, which included advice on Self Assessment Tax Returns, which we can calculate and file on your behalf.

Our tax advice team consists of varying personal tax advisors that will work with you to understand your objectives and provide comprehensive tax planning to suit these objectives. Our team has close ties with HM Revenue and Customs, so we are always on top of our game and up to date with the latest developments and legislation.

To discuss how we can assist you please contact us now.

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