Self Assessment tax return 20/21 – what do you need to know?

January sees the highest number of Self Assessment tax returns submitted in a single month, with many individuals leaving this arduous task to the last possible moment. 

It is common to see more than 50% of all HMRC issued tax returns submitted in January despite having already had 9 months to file.

With the Coronavirus pandemic still very much affecting people’s lives, HMRC has announced some relaxations:

  • The £100 late filing penalty will not be charged for any 2020/21 returns filed by 28 February 2022
  • Late payment penalties will not be charged for any tax due in relation to the 2020/21 tax year that is either paid by 1 April 2022 or where a ‘time to pay’ payment plan was set up by 1 April 2022

Late Filing

Although the late filing penalty for tax returns filed online between 1 February – 28 February 2022 will be automatically waived, individuals should try to meet the 31 January deadline. 

Not least because a late-filed tax return can unwittingly affect other aspects of taxation.  One of these is that the enquiry window, which is usually one year from the date of filing, is extended to the quarter day next following the first anniversary of the day on which the return was made. For example, a return filed on 20 February 2022 will have an enquiry window up to 30 April 2023.

Late payment

Self-assessment late payment penalties are usually 5% of the outstanding tax liability.  These are usually levied at:

  1. The day after 30 days after the due date,
  2. Five months after the first penalty (around 6 months from due date), and
  3. 11 months after the first penalty (around 12 months from due date)

The penalties are only levied on the 2020/21 tax liability, so if there is also a 2021/22 1st payment on account due by 31 January 2022, this will not attract a late payment penalty.  Despite the announcement that the 5% penalties will not be charged if payment is made or a payment plan is agreed, interest will continue to be accrued at the current rate of 2.75%.

Time to Pay Agreement

To enter a time to pay agreement with HMRC, individuals have the option of the self-service time to pay facility.  This can be accessed via the government gateway login, however, there are a few conditions to meet:

  • There must be no outstanding tax returns
  • The tax liability must be less than £30,000
  • The plan is put in place before 2 April 2022
  • The debt can only be spread over a maximum of 12 months

If the tax liability is more than £30,000, or if more than 12 months is required, then the individual will need to contact HMRC’s helpline on 0300 200 3822.

There is also a separate HMRC helpline for businesses and self-employed individuals who cannot pay due to Coronavirus, this is 0800 024 1222.