On Monday 25 January HMRC finally bowed to pressure from the professional bodies and agreed to relax the penalty regime for individuals who found it impossible to submit their 2019/20 SA tax return on time. If that return is submitted by 28 February no penalty notice will be raised.
This is an improvement on the previous HMRC concession which was to allow 90 days in which to appeal against late filing penalties instead of 30 days.
However, the tax payment deadline has not changed. Interest will accrue at 2.6% from 1 February 2021 on any part of the tax bill paid after 31 January, even if it is paid under an agreed payment plan (time to pay arrangement).
If you will find it difficult to pay all your tax by 31 January, you should apply to HMRC for payment plan as we explained on 14 January 2021. But HMRC will not consider the taxpayer’s application for time to pay until your 2019/20 return has been received and processed.
Working out a payment schedule for a self-employed taxpayer over 2021 is particularly difficult, as we still have no idea of how much the fourth SEISS grant will be, or when it will be paid. It appears that the Chancellor wants to reveal this information as part of his Budget statement on 3 March, which will be a month too late for most self-employed traders.
The tax return completion process also involves reviewing the tax return for the prior year: 2018/19, to check that all elections and claims relating to that year have been submitted. Most of those elections for 2018/19 will have a filing deadline of 31 January 2021, and that hasn’t changed.
Taxpayers who are claiming working or child tax credits had to renew their tax credits claim for 2020/21 by 31 July 2020, and finalise the 2019/20 claim by the same date. If estimated figures were provided in July 2020 the final income figures need to be provided to HMRC by 31 January 2021.Written by the Tax Advice Network