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Late payment penalty deferred to 1 April

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Self-assessment taxpayers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021, HMRC has announced.

The penalty is normally charged on any unpaid tax that is still outstanding 30 days after the 31 January due date for payment, and is set at 5% of the amount unpaid at that date. This year, because of the impact of the covid-19 pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan to avoid the penalty.

Taxpayers who set up a monthly payment plan via the HMRC online ‘time to pay’ facility will need to do so by midnight on 1 April to avoid the penalty, but HMRC notes that late payment interest will still be charged from 1 February. Further penalties for tax remaining outstanding at six and 12 months will apply as usual where a payment plan has not been set up.

Taken together with the January 2021 announcement on relaxation of the automatic late filing penalty, this means the following:

  • For returns filed online by 28 February: no automatic £100 late filing penalty.
  • Tax paid or Time to Pay arrangement set up by 1 April 2021: no 5% late payment penalty, but late-payment interest (currently at 2.6%) will run from 1 February.


Issue: 1521
Categories: News