Taxpayers are being warned to look out for mounting charges from this week, despite a change in rules from HMRC.
Martin Lewis says almost two million people who have missed the tax return deadline won’t yet face a £100 penalty – as that deadline has been extended to February 28.
But he warns that charges on what is owed will start mounting from this week.
“HMRC is waiving £100 fines for people who file returns after the January 31 deadline but by the Feb 28 cut-off,” Martin wrote in this week’s MoneySavingExpert newsletter.
“But 2.6% interest is still charged on outstanding tax from February 1, so many should consider paying an estimate ASAP even if they haven’t done their return, and fail to do it before March 3 there’s a 5% fee on top.”
Tax returns are due from certain child benefit claimants, the self-employed and those who have earned extra untaxed income.
HMRC said those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty.
Self-employed people can use a calculator on the GOV.UK website to help estimate their tax bill.
Late payment interest accrues daily from the due date until the tax is paid in full. It is charged at 2.6% annum, so if you paid a £100 tax bill a year late, you would be charged £2.60, reports The Mirror.
There are also late payment penalties which can be charged on top of this, the first of which is a 5% fee on March 3, 2021 if you have not settled your tax bill by then.
Karl Khan, HMRC’s interim director general for customer services, said: “Thank you to the 10.7million customers who have sent in their tax returns.
“We won’t send anyone a late filing penalty if they complete their tax return by 28 February.
“We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.”
There are several ways that customers can pay their self-assessment tax bill or an estimated amount. They can pay online, via their bank, or by post.
Anyone who cannot pay their bill in full can apply to spread the cost. Workers can request a payment plan, in up to 12 monthly instalments, online via GOV.UK provided they meet the following requirements:
They need to have no:
Outstanding tax returns
Other tax debts
Other HMRC payment plans set up
The debt needs to be between £32 and £30,000
The payment plan needs to be set up no later than 60 days after the due date for payment.
But you should aim for this as soon as possible, and before March 3 to avoid a 5% late payment penalty.
For a full breakdown of what interest and penalties you could be charged, use the GOV.UK self-assessment penalties calculator here.