ICAEW.com works better with JavaScript enabled.

TAX NEWS

Act now to avoid late payment penalties

Article

Published: 10 Mar 2022 Update History

The 5% late payment penalty for self assessment income tax unpaid on 1 April 2022 can be avoided by setting up a time to pay arrangement by that date. ICAEW’s Tax Faculty explains.

Missing the payment deadline for paying self assessment income tax can be expensive.

Interest, now at 3%, is charged on a daily basis from the due date. It applies to payments on account and balancing payments. The waiver of late filing and late payment penalties for 2020/21 self assessment returns and payments does not alter this; interest is charged as normal.

The 5% late payment penalty often comes as more of a surprise to taxpayers, as it is charged if tax is outstanding on three particular trigger dates. These trigger dates are usually 30 days, six months and 12 months after the due date for the tax. The trigger date for the first late payment penalty for unpaid tax for 2020/21 has been extended from the usual 30 days to 1 April 2022.

The 5% penalty can be avoided by setting up a time to pay arrangement before the 1 April 2022 trigger date.

Taxpayers (but not agents) can set up a time to pay arrangement online if they owe £30,000 or less, can pay within 12 months and meet certain conditions. This online service will close for 2020/21 payments on 1 April 2022.

Those that cannot set up the arrangement online (because the amount due is too high or a longer-term arrangement is needed, for example) should phone HMRC on 0300 200 3822 to arrange time to pay.

Late payment penalties are not charged on payments on account, for instance, a first payment on account for 2021/22 which was due on 31 January 2022.

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.