31 January 2021: Tax return submission and payment due date – What are your options?

31 January 2021 is the deadline for submitting your tax return. It is also the deadline for making any balancing payment due from 2019/20 and the first payment on account towards the 2020/21 tax year. This year the payment due on 31 January will also include your payment on account from July 2020 if you chose to defer it.

It goes without saying this has been a difficult year. There will be many taxpayers struggling to meet the filing and payment deadline. We have taken a look at the options available to you.

Filing deadline

HMRC have rejected calls to extend the filing deadline. Taxpayers are encouraged to file on time where possible. This can include filing your return on time but with provisional figures for any missing information.

If your tax return is late for reasons related to the pandemic and a penalty is issued this will not be payable. HMRC have confirmed they ”will make the process of cancelling penalties as simple and easy as possible for all concerned”.

In a press release on Monday 25th January 2021 HMRC provided a further update saying ”Self Assessment customers who cannot file their tax return by the 31 January 2021 deadline will not receive a late filing penalty if they file online by 28 February.”

Taxpayers are still obliged to pay their bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. Customers can pay online, or via their bank, or by post before they file. More information on how to pay is at GOV.UK.

Tax payment

With many businesses adversely affected by the pandemic your business profits or other income for the 2020/21 tax year may be lower than the previous year. If this is the case you can consider reducing your payments on account. This can be done on your tax return or via an online form. Please get in touch if you believe your payments on account may be too high.

If you are unable to make the payment due you can apply online for a time to pay arrangement with HMRC. The online process allows taxpayers to set up a direct debit to pay their tax liability in instalments over 12 months.

To access the online time to pay service you must meet the following criteria:

  • you must have no outstanding tax returns, debts or existing payment plans with HMRC,
  • you owe no more than £30,000,
  • you must set up the payment plan within 60 days of the original payment date, and
  • you have to pay the instalments by direct debit.

If your liability is more than £30,000 you should contact HMRC directly to negotiate a time to pay arrangement.

Once a payment plan is in place there will be no late payment penalties. You will however still have to pay interest on the balance owed. Interest (currently at a rate of 2.6% per annum) will be charged from 1 February 2021 on amounts unpaid by 31 January 2021 until HMRC receive payment.

Our team understands the challenges businesses and individuals are currently facing. We are here to help if you have any questions or your business needs additional support.

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