The clock is ticking, don't be late! File your 2020 Self-Assessment Tax Return on time

11 January 2021

*Updated 26 January 2021*

On 25 January 2021, HMRC have confirmed that individuals will not be charged an automatic late filing penalty where a taxpayer fails to submit their self-assessment tax return online by 31st January 2021, this is on the basis that the return is filed on or before 28th February 2021.  Whilst this concession is in place HMRC are still encouraging customers who have not yet filed to do so on time by 31‌‌ ‌January, if possible.

Any tax liability due for 2019/20 still needs to be paid on or before 31‌‌ ‌January. Interest will be charged from 1‌‌ ‌February on any outstanding liabilities. Customers can pay online, or through their bank, or by post before they file.

If any customer cannot afford to pay by 31‌‌ ‌January, they may be able to set up an affordable plan and pay in monthly instalments however they will need to file their 2019-20 tax return before setting up a time to pay arrangement.

Tax liabilities and paying in instalments

Any Income Tax, National Insurance and Capital Gains Tax liabilities due for the 2019/20 tax year must also be paid by midnight on 31st January 2021.

HMRC are keen to support people who cannot afford to pay their tax bill in January by allowing them to pay in instalments. They have recently expanded their online service so that these instalments can be arranged without the need to discuss it with HMRC staff first or provide details of current income and expenditure.

After the submission of your tax return for the year ended 5 April 2020, if you qualify for this flexible approach offered by HMRC, you can get your payment plan set up any time before the end of March 2021.

To be eligible for an instalment plan all the following criteria must be met:

  • No current outstanding tax returns, debts or existing payment plans with HMRC; and
  • The liability due is £30,000 or less; and
  • Proposed payment plan is set up within 60 days of the original payment date; and
  • Instalments must be made via direct debit.

How to arrange an instalment plan

To arrange an instalment plan (a ‘time to pay’ agreement) you will need your Government Gateway account details to log on. If you don’t have a Government Gateway account, this can be set up at the beginning of the process. HMRC believe that around 95% of Self-Assessment taxpayers due to make a payment by 31 January 2021 will be able to use this self-serve option.

If you can’t use HMRC’s online payment plan tool as you do not meet all of the above criteria, you can still contact HMRC to discuss setting up a payment plan. This can be done either via HMRC’s Self Assessment payment helpline (0300 200 3822) or their coronavirus helpline (0800 024 1222).

If you are asking to spread your payments over more than 12 months, HMRC are likely to need more information such as details of current income and expenses before agreeing to a longer payment period.

All taxpayers entering a payment play will still be liable to late payment interest from 1st February 2021 on the outstanding tax until it is paid in full.

Do I need to submit a tax return?

Broadly, if any of these scenarios applied during 2019/20 a Self-Assessment tax return should be submitted on or before the deadline:

  • you are a self-employed sole trader whose annual turnover is more than £1,000;
  • you earned more than £2,500 renting out property;
  • you, or your partner, received child benefit and either of you had an annual income of more than £50,000;
  • you received more than £2,500 in other untaxed income, for example from tips or commission, or are an employee claiming expenses totalling more than £2,500;
  • you earn more than £100,000 a year; or you earned income from abroad that you need to pay tax on.

If you require assistance to file your 2020 Tax Return or require further information in connection with discussing a payment plan with HMRC, please contact Carol Edwards or your usual AAB contact.

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