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Confused by HMRC’s late tax filing update?

  • 3 min read
  • 27 Jan 2021
HMRC deadline update

So, HMRC have announced an update to the 2019/20 Self Assessment tax return deadline with less than a week to go. There’s still a 2.6% APR interest rate if you owe money and file after 31st January. But no £100 flat fee. Anyone else confused?

Don’t worry. In classic HMRC fashion, it’s a lot to get your head around. Scroll down for a breakdown of everything you need to know.

What did HMRC say?

On 25th January, HMRC announced that there will be no late filing penalty for people filing a 2019/20 tax return online if they file by 28th February 2021. You will only pay a penalty for paying (rather than filing) late. 

The £100 flat fee that is usually charged if you file your return after 31st January will be waived this year until 28th February 2021. This comes after mounting pressure on HMRC from lobbying groups calling to extend the tax return deadline.

Regular penalties won’t resume until 1st March 2021. 

Read the full HMRC announcement here. 

What did HMRC not say?

It’s very unusual for people to pay without filing. The two normally go hand-in-hand. In fact, most people only know what they’re paying as a result of filing their tax return. So the concession does more to prevent a wave of late filing appeals for HMRC to process than it does to lessen the financial burden on those filing. 

This is very important to be aware of – if you do decide to delay filing your tax return, you will be charged interest on your bill for filing after 31st January. The interest is only 2.6% APR – the standard rate for late payment – but HMRC have not included it in their announcement.

Put simply, HMRC are waiving the £100 flat fee, but not the interest charge if you owe money. The interest payment will probably work out less than the flat fee, but this measure should not be considered a free deadline extension.    

Take a look at this table to see how it works:

Filing datePayment datePenaltyInterest
Before 31st JanBefore 31st Jan£0No
Before 31st Jan1st Feb onwards£0Yes
Between 1st Feb – 28th Feb1st Feb onwards£0Yes
1st March onwards1st March onwards£100Yes

What does 2.6% APR mean? 

APR stands for Annual Percentage Rate which basically means a yearly rate. So in terms of the 2.6% interest charged by HMRC, this will actually work out as about 0.2% of your tax bill if you file by the end of February 2021.

From 1st March 2021, the penalties will return to their usual amounts.

Should I file late?

When you file is up to you, but we’d recommend not delaying unless you absolutely have to. Otherwise you’ll incur a charge that you could have avoided.

Treat the 31st January deadline as you ordinarily would have done. But if you’re struggling to pay your tax bill as a result of the impact of COVID-19 on your business, get in touch with HMRC as soon as you can. You may be able to set up a payment plan to spread the cost of your bill.

Or click here for general help with your Self Assessment.

How much will I owe? 

Take a look at our late payment calculator to work out what you might owe if you’re having to file late.

Which tax year is this for?

Need a hand? 

If you have any questions, don’t hesitate to get in touch with our support team on [email protected] They can help if you’re confused by what this change means for you.

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