Penalty deadline just two weeks away
HMRC allowed a generous relaxation of the rules surrounding penalties for late payment of tax for 2020/21. However, the deadline to act is fast approaching. What do you need to do if you owe tax for that year?
Usually, if you pay your balancing payment under self-assessment after 31 January, you'll be charged interest on the outstanding amount from 1 February. Furthermore, if anything remains unpaid 30 days later, a charge of 5% of the amount due is added to the bill. However, for 2020/21 there was a relaxation of this. The deadline to avoid a penalty for 2020/21 was moved to 31 March. But what you may not know is that a penalty can still be avoided if you can’t pay in full by this date. All you need to do is contact HMRC and agree a time to pay arrangement before the end of the month. No penalty will then be charged, as long as the arrangement is adhered to. Note that interest will still be charged from 1 February. Additionally, the penalty interest rate increased on 21 February 2022, from 2.75% to 3%.
You can make the arrangement via your personal tax account online, or by contacting HMRC on 0300 200 3822.
Related Topics
-
Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
-
HMRC clarifies summer holiday VAT cut
HMRC has published further guidance on the temporary VAT reduction for certain activities during the school summer holidays. The additional detail helps businesses determine which supplies qualify for the relief and, importantly, which do not. What do you need to know?
-
Electronic VAT return and payment due