By David Richmond, Accounting Partner Armstrong Watson LLP

HMRC will waiver late filing and late payment penalties for Self Assessment taxpayers for one month – giving them extra time, if they need it, to complete their 2021 tax return and pay any tax due.

This recognises the continued capacity pressures faced by taxpayers and agents caused by the impact of Covid-19, and, in particular, the new Omicron variant.

The penalty waiver means that anyone who cannot file their return by the January 31 deadline will not receive a late filing penalty if they file online by February 28, and anyone who cannot pay their tax by the January 31 deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by April 1, 2022.

However, it should be noted there is no change to the filing or payment deadline and other obligations are not affected. The deadline to file and pay remains January 31, 2022, and interest will be payable from February 1, as usual, so it is still better to pay on time if possible.

Interest will be charged on late payments at 2.75 per cent. Assuming taxpayers have sufficient funds to settle their tax liabilities, they would be best advised to submit their tax returns and pay their tax liabilities by January 31. This is because these funds will be attracting negligible interest in their own bank account and late payment interest of 2.75 per cent can be saved by submitting and paying on time.

Any tax returns received online in February will still be treated as received late, with a valid reasonable excuse for the lateness.

While the penalty waiver will come as welcome news for many, it is still advisable for taxpayers to get their tax returns completed and filed by January 31, 2022, so they know how much tax is due in good time, avoid late payment interest; and give themselves plenty of time to arrange payment plans if required.

The existing Time to Pay service allows people who need 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.    

To discuss your tax return, or for more information about the penalty waiver, please contact David Richmond on 01756620025 or email david.richmond@armstrongwatson.co.uk.