Self Assessment Tax Filing Deadline Extended to 28 Feb – please pass this on!

At (almost) the eleventh hour, HMRC announces tax filing deadline extended to 28 February

HMRC announced today that you will not receive a penalty for filing your 2019-20 tax return late, as long as you file online by 28‌ February.  We are still encouraging taxpayers who have not yet filed to do so by 31‌ January, if possible.  Not before time, HMRC have given tax payers an extra 4 weeks to file their personal tax return.  However you still need to pay the tax due by the end of January.  The tax filing deadline is extended but not the tax payment deadline!

HMRC had repeatedly resisted calls to move the filing deadline for 2019-20 tax returns including a letter from Jim Harra on 18 December 2020.  The letter includes the following message:

• HMRC want to encourage as many customers as possible to complete their returns by 31 January 2021.  Even if they can’t pay in full, because filing their return is key to crystallising their Income Tax liability.
• No-one will have to pay a penalty if they cannot file on time because of the impact of the COVID-19 pandemic.

I have already filed my tax return, do I still need to pay my tax by 31 January?

Whether or not you have filed your 2019-20 tax return, you still need to pay your Self Assessment tax bill by 31 January 2021.  The HMRC announcement was that the tax filing deadline be extended, but you still need to pay your tax by the normal deadline.

You will pay interest on any amount HMRC receive after the end of January.  Interest will apply from 1‌‌ ‌February on any outstanding amounts due.  The current rate of interest is 2.60%.

Can I pay tax even if I haven’t filed my return yet?

You can pay your Self Assessment tax bill by direct debit, internet banking, at your bank or by cheque through the post.  It is a bit late to be sending cheques now.  We recommend to all our clients you pay by internet banking.

What do I need to pay my tax by internet banking?

You’ll need to use your 11-character payment reference when you pay. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’.

You can find it on your:

• HMRC online account
• paying-in slip, if you get paper statements

I don’t know where to start with my tax return

If you haven’t started with your tax return yet, the HMRC announcement for the tax filing deadline to be extended to 28 February should give you the motivation to get it done!  If you need someone to prepare your 2020 tax return please contact Alterledger and we can work out what you need to do.

Can I ignore the HMRC demand for a tax return?

Even if you haven’t earned anything since 5 April 2019 you will still need to file a tax return if HMRC have sent you a demand.  Where you have claimed the SEISS grants in the past 12 months, you need to prove that you are still trading.  If you fail to file a 2019-20 tax return you could find that you have to repay your grant.

If you haven’t already filed your tax return, use the extended tax filing deadline as an opportunity to get your accounts up to date!

Tax filing deadline extended – ok – but what can I do to reduce my tax bill?

HMRC normally requires you to pay 50% of your 2020-21 tax bill when you file your 2019-20 return.  This is a payment on account for your next year’s tax.  If your profits are expected to be lower in the current tax year you can apply to reduce your payments on account.  You can reduce your payments on account in your tax return or if you have already filed it, you can apply to reduce the payments online.

You can make a time-to-pay arrangement with HMRC to spread your tax bill over monthly instalments.