We now have a further update to share with you regarding HMRC’s relaxation of late payment penalty rules for self-assessment taxpayers. It has now been confirmed by HMRC that self-assessment taxpayers will not be subject to the 5% late payment penalty if the tax is paid or a time to pay arrangement is set up by 1 April 2021.
HMRC had previously advised that a time to pay arrangement to spread a taxpayers 2019/20 liability could be set up within 60 days following the filing and payment deadline of 31 January 2021. HMRC have also confirmed that interest would be applied, as normal, to any late payment of tax after this date.
HMRC had not said though, whether the 5% late payment penalty, which would normally be levied on 3 March, would be charged on any outstanding tax as at that date. HMRC has now issued a release, which states that a late payment penalty will not be applied providing either the tax due is paid or a monthly payment plan is agreed with HMRC prior to midnight on 1 April 2021.
A payment arrangement can be set up online if the individual’s tax liability is less than £30,000 or otherwise via the Self-Assessment Payment Helpline on 0300 200 3822. In order to set up a payment arrangement, the individual’s tax return must first have been submitted to HMRC. Taxpayers who have not yet filed their 2019/20 return have until 28 February 2021 to do so, to avoid a £100 late filing penalty.