In recognition of the pressure faced this year by taxpayers and their agents, HMRC is to allow an extra month before it charges late filing and late payment penalties for 2020/21 self assessment tax returns and payments.

Almost 6.5m of the 12.2m self assessment taxpayers have already submitted their tax return in advance of the 31 January 2022 deadline.

The statutory 31 January 2022 filing and payment deadlines are unchanged and HMRC is encouraging all those who can meet these deadlines to do so.

The penalty waivers mean that:

• those who cannot file their 2020/21 return by the 31 January 2022 deadline will not receive a late filing penalty if they file online by 28 February 2022; and
• anyone who cannot pay their 2021/21 self assessment tax due by the 31 January 2022 deadline will not receive a late payment penalty if they pay in full or set up a time to pay arrangement by 1 April 2022.

It is important to note that late payment interest will be payable from 1 February 2022 at the recently increased rate of 2.75%.

Filing a return and/or making payment after the 31 January deadline can affect the collection of class 2 national insurance contributions (NIC). Voluntary class 2 NIC will need to be paid separately if the liability is not recorded on HMRC’s system and/or payment not made by this date. Entitlement to contributions-based employment and support allowance is based on class 2 NIC paid by 31 January and late payment may put entitlement at risk. 

ICAEW’s Tax Faculty commends HMRC for making this announcement, which will be welcomed by many members (although some reported that they were on track to complete all returns by 31 January). In the faculty’s discussions with HMRC about a possible easement, ICAEW pressed HMRC for any announcement to be made earlier than last year. The fact that the announcement was made more than three weeks before the filing deadline is welcome. The early announcement should help to relieve some of the problems and associated stress that many taxpayers and members will be experiencing.