Self-employed can now file their self-assessment in February, but bills must be paid by 31st January
HMRC has bowed to pressure and announced that it will waive the £100 late penalty fee for those who cannot submit their self-assessment tax return by the deadline, as long as they file it online by 28th February.
However, the taxman has been criticised for not doing the “decent thing” and waiving penalties for late tax payments too.
So far, more than 8.9 million people have filed their tax return for the year 2019/20.
Commenting on the move, Jim Harra, Chief Executive at HMRC, said: “We recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31st January.
“Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns.”
News welcomed by industry bodies and MPs
HMRC added that taxpayers are still obliged to pay their bill by the end of the month and will be charged interest from 1st February for any outstanding liabilities.
Broadly speaking, the announcement has been welcomed by industry bodies and MPs. Treasury Committee Chairman and Conservative MP Mel Stride, said: “The decision will provide the flexibility that many individuals and businesses require during this difficult time.”
Derek Cribb, CEO at the self-employment trade association, IPSE, concurred to a degree. He added: “2020 was a financially devastating year for the self-employed, especially the estimated 1.5 million who missed out on the SEISS.”
‘HMRC could go further’ to help self-employed
Cribb was, however, quick to also point out that HMRC could have done more:
“[…] While this is a helpful intervention, we believe HMRC could go further to relieve some of the financial stress on the self-employed. In particular, we would urge government to do the decent thing and drop the late payment penalties on tax owed as well, to allow freelancers to pay this back in instalments without the threat of fines.”
HMRC has also highlighted that anyone who is unable to pay their tax bill can apply to spread their payments over 12 months, as long as their bill is under £30,000. They will need to file their tax returns first though.
Those who have tax bills above £30,000 or need longer than 12 months to pay their self-assessment are advised to contact the tax office, which they can do here.