Four million Britons have yet to file their tax return, with less than a week to go until the January 31 deadline — but it is unclear how many are taking advantage of a month’s grace on penalty charges or simply cannot afford to pay amid the cost of living crisis.
This month, HM Revenue & Customs decided to waive the usual £100 late payment penalty as long as taxpayers filed their returns and paid any tax owed by the end of February.
This was intended to create some breathing space for the 12.2m people in the UK who now need to complete a tax return, millions of whom have the added complication of calculating tax payments on Covid-19 support grants.
HMRC’s disclosure on Monday that 4m people have yet to file means that 33 per cent of taxpayers could miss the usual deadline. This is higher than the same period a year ago, when just over 26 per cent of taxpayers had yet to file a return.
However, HMRC’s announcement last year that it would waive penalties for late payers was only made six days before the January 31 deadline.
Tax payments are still due on January 31, and those who file late will have to pay HMRC interest on any tax owed, calculated at 2.75 per cent annually. For example, interest on a tax bill of £10,000 paid 28 days late would be just over £21.
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“We know some customers may struggle to meet the Self Assessment deadline on January 31 which is why we have waived penalties for one month, giving them extra time to meet their obligations,” said Myrtle Lloyd, HMRC’s director-general for customer services.
“And if anyone is worried about paying their tax bill, they can set up a monthly payment plan online — search ‘pay my self assessment’ on gov.uk.”
HMRC said those who cannot pay the tax owed by March 3 will not be charged the usual 5 per cent late payment penalty if they set up a “time to pay” arrangement by April 1.
Interest is charged for spreading the payments over the course of a year. Those with less than £30,000 of tax due can set up a payment plan online after they have filed their return.
Nimesh Shah, chief executive of tax advisers Blick Rothenberg, warned that even though taxpayers may not receive a £100 late filing penalty, there could be other consequences to filing late.
“A tax return filed after January 31 is deemed to be ‘late’ for all other purposes — this can mean that the window HMRC has to raise an inquiry is automatically extended,” he said.
“There may also be certain claims and elections that need to be submitted by January 31 that are usually done via the tax return, so taxpayers need to be clear on the wider implications of filing after January 31.”