HMRC waives late self-assessment penalties

HMRC waives late self-assessment penalties

HM Revenue and Customs is waiving late filing and late payment penalties for self assessment taxpayers for one month to give them extra time due to the Covid-19 pandemic.

The tax authority has given an extra month to complete the 2020-21 tax return and pay any tax due.

HMRC said it recognised self assessment taxpayers and their accountants had come under pressure to file this year. 

It stated: “Covid-19 is affecting the capacity of some agents and taxpayers to meet their obligations in time for the January 31 deadline. 

“The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.”

The deadline to file and pay is still January 31, 2022 but the waivers mean anyone who cannot file their return by the deadline will not receive a late filing penalty if they file online by February 28.

Also anyone who cannot pay their tax due by the deadline will not receive a late payment penalty if they pay their tax in full, or set up an arrangement with HMRC, by April 1.

But the tax authority has encouraged people to try to file and pay on time if they can, because interest will be payable from February 1.

Figures from HMRC showed that of the 12.2m taxpayers who needed to submit their tax return by the January deadline, almost 6.5m had already done so.

Angela MacDonald, HMRC’s deputy chief executive and second permanent secretary, said: “We know the pressures individuals and businesses are again facing this year, due to the impacts of Covid-19. Our decision to waive penalties for one month for Self Assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.”

The time to pay service from government allows any individual or business who needs it the option to spread their tax payments over time. 

Self-assessment taxpayers with up to £30,000 of tax debt can do this online once they have filed their return.    

The 2020-21 tax return covers earnings and payments during the pandemic and so individuals will need to declare if they received any grants or payments from the Covid-19 support schemes.

Dawn Register, head of tax dispute resolution at BDO, said: “It is wise for those with tax returns prepared and those who have funded to pay, to still meet the January 31 deadline. However, HMRC clearly understands that those severely impacted by Covid-19 should not face receiving a ‘brown envelope’ in February as it would result in unnecessary angst. 

“This additional time will provide taxpayers and advisers with crucial latitude, which is needed in these unprecedented times. Previously, taxpayers would have needed to rely on adhering to HMRC’s ‘reasonable excuse’, which is open to interpretation – so this new certainty is very timely”.

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