Is your self assessment tax return on time?

As the self-assessment deadline looms, Terri Halstead, Regional Head of Tax, guides you through the key areas to ensure you meet your deadline.

HMRC’s best kept secret

  Nothing screams global pandemic more than HMRC passing up the opportunity to get a bit of extra cash from taxpayers who miss the self-assessment deadline.   It’s that time of the year again, and all eligible taxpayers who haven't already done so need to file an online self-assessment tax return to HMRC for the 2019/20 tax year by 31st January 2021. But, although this deadline remains unchanged as a result of Covid-19, and the Revenue is not officially announcing an extension, there are some important differences this year that may help anyone who is fretting about the deadline.  

The late show

  For starters, if you file your tax return late, you won’t face a fine this year. Usually, the penalty is £100 if your tax return is up to three months late. You must show that the delay was as a result of Covid-19 and, although there is no list of reasonable excuses, it’s really a matter of common sense. People have had their lives turned upside-down in many ways due to the virus, from themselves being ill or hospitalised, to their accountants being out of action, to postal delays, home schooling pressures, disability or self-isolation.   The self-employed and anyone else who files self-assessment tax returns also need to pay any taxes 'on account' that had been due on 31st July 2020 by 31st January 2021, having been given a six-month extension by the government because of the pandemic.  The only exception is for people who have separately agreed a 12-month repayment plan. You'll also need to make your January 2021's 'on account' payment as usual by the same deadline, unless you've also agreed a repayment plan.  

Enhanced direct debits

  Those who owe tax of more than £32 and less than £30,000 (increased from £10,000 from 1st October 2020) in January 2021 have been able to use HMRC's 'Enhanced Time to Pay' scheme to agree a repayment plan to spread the bill and repay it by direct debit over a period of up to 12 months. To make the most of this, you need to have filed your 2019/20 tax return by the 31st January 2021 deadline and set-up the repayment plan no later than 60 days after the due date of a debt. You also need to have no outstanding tax returns, other tax debts or other payment plans set up. Remember, though, that you will pay interest of 2.6% a year from 1 February 2021 until your bill has been repaid in full.  

VAT’s your lot

  Finally, if your business is VAT registered and you deferred your March to June 2020's VAT payment, you will now have the option to spread your payment over the 2021/22 financial year, by making up to 11 smaller monthly instalments, interest free, and paying the lot by the end of March 2022. You'll need to opt into the scheme, though, and, at the time of writing, the Gov.uk website was still saying that the online “opt in” process is not yet up and running and ‘will be available in early 2021’.   If you would like any Tax assistance or for general help and advice, get in touch with our team.