Last month, we discussed the new late filing penalty changes for submitting your self assessment tax return in 2022. This change allowed business owners to submit their tax return later than the original deadline of the 31st January without being fined so long as it was submitted before the 28th February.
Over 11.3 million businesses took advantage of this extra time, filing their late tax returns in February without receiving the usual £100 late filing fee.
HMRC have more recently announced that this year’s self assessment 5% late payment penalties are to be scrapped until April, provided individuals pay their liabilities by 1 April or arrange a ‘time to pay’ with HMRC by the same date.
This deferral will allow businesses to use the money that would be claimed as a fine to improve cash flow and keep their firms afloat during the current recession.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
“We understand some customers might be worrying about paying their Self Assessment bill this year, and we want to support them. To see if you’re eligible to set up a payment plan, go to GOV.UK and search ‘pay my Self Assessment’”
Will I Still be Charged Interest?
It is worth noting that if you do end up paying your self assessment after the original deadline of 31 January 2022, you will still be charged interest at 2.6% per annum from 1 February.
Therefore, you’re probably better off still paying what you owe on time to avoid accruing unnecessary costs.
Self Assessment Filing Timeline
31 January 2022 – Self-assessment filing deadline & payment deadline.
1 February 2022 – 2.6% interest starts to accrue on any outstanding tax bills.
28 February 2022 – Last date to file any late online tax returns without receiving a penalty.
1 April 2022– Last date to pay any outstanding tax or Time to Pay arrangement to avoid a late payment penalty.
How to Set Up a Time to Pay Arrangement
The existing Time to Pay service allows any individual or business who needs it the option to spread their tax payments over time. Payment in full or payment plans must be in place by midnight on 1 April in order to avoid the 5% penalty.
If you’re struggling to make a tax payment, you should contact HMRC as soon as possible and they will come to an agreement with you on when you can make your payment by.
Before calling, make sure you have the following information to hand:
- The reference number of the bill you wish to discuss
- Details of the amount of tax you are unable to pay
- Why you are not able to pay and what your current financial circumstances are
- What you have to to try to pay your bill on time
- How you expect your finances to change in the future
- Your bank account details
Making Self Assessment Payments More Affordable with Weekly or Monthly Payments
You can set up a Budget Payment Plan if you would rather make regular monthly or weekly payments toward your next tax bill instead of one lump sum payment.
The amount in your Budget Payment Plan will be used against your next tax bill, meaning you have less to pay at the payment deadline.
If the amount in your plan doesn’t cover your next bill, you’ll need to pay the difference to make the full amount. If you have more in your account than the required amount, you can request a refund from HMRC.
When setting up your Budget Payment Plan, you can choose how much you want to pay and how often you want payments to be made- you can even pause payments for up to 6 months if needed.
In order to use the Budget Payment Plan, you must be up to date with all previous Self Assessment returns.
Set Up Your Budget Payment Plan
To start setting up your payment plan, go to your HMRC online account and set up a Direct Debit. Then, choose the Budget Payment Plan option and follow the instructions.
Get Expert Help with Your Self Assessment
With so many changes to tax legislation, it’s easy to become confused and overwhelmed when it comes to submitting your self-assessment tax return, putting taxpayers at risk of incurring more penalties through failing to complete their returns on time or correctly.
It can be a vicious cycle for those without the right kind of expert help. Thankfully, you don’t need to be one of them. At Ryans Chartered Accountants, we can save you significant amounts of time, worry, and money by handling your self assessment for you and all other personal tax planning.
We will do all the necessary computations, complete your return and even offer advice on how you can minimise your tax liability.
We can act as your agent, dealing directly with HMRC on your behalf and, should you be selected for a self assessment enquiry, act for you at any meetings.
Get in touch with our team at Ryans today to discuss how we can help you.