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Avoid Self Assessment Late Payment Penalty

As a result of the impact of COVID-19 restrictions, self assessment taxpayers have more time to pay their tax or set up a payment plan to avoid facing a 5% late payment penalty charge, as long as arrangements are in place by midnight on 1 April.

Anyone who has not settled their liabilities for the 2019-20 financial year can pay their tax bill or set up a monthly payment plan online via the GOV.UK website.  You will have the option to pay online, via your bank, or by post.  Alternatively, you can set up a Time to Pay instalment arrangement and spread the cost of your tax bill.

There are some caveats:

  • you must have filed your 2019-20 tax return before a Time to Pay arrangement can be made
  • your liability must be less than £30,000; and
  • you must not have any other payment plans or debts with HMRC.

Taxpayers will be able to pay their tax bill in monthly instalments, up to January 2022. For anyone who has bills over £30,000, individual repayment arrangements will need to be negotiated with HMRC directly.

HMRC did not change the payment deadline of 31 January 2021 and interest will be charged on any late payment. The current rate of late payment interest is 2.6%.

The 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up by 1 April 2021. If a payment plan is not set up, further late payment penalties will be charged at 6 and 12 months (August 2021 and February 2022).

If you are worried about how to pay any tax owing please do get in touch. Alternatively, you can call the Self-Assessment Payment helpline on 0300 200 3822 (Monday to Friday, 8am – 4pm).

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