Still owe NIC and tax due to be paid 31st January 2021?

Many self-assessment taxpayers will have tax and NIC unpaid for 2019-20 and possibly payments on account for 2020-21. The payments were all due to be settled by 31st January 2021. The rest of this blog sets out how you can avoid future late payment penalties if you cannot pay these liabilities before the end of March 2021.

What are the statutory late payment penalties?

Any self-assessment liabilities due 31st January 2021 and unpaid 30 days later (by midnight 3rd March 2021) would typically attract a late payment penalty amounting to 5% of any outstanding tax.

If the tax remains unpaid for six months (at midnight 1st August 2021) or one year (at midnight 1st February 2022), further 5% penalties will also be applied. Additionally, interest will accrue on amounts outstanding from 1st February 2021. The current rate is 2.6%.

What support is HMRC now offering?

Normally, a 5% late payment penalty is charged on any unpaid tax outstanding on 3rd March of any year. But in 2021, because of the impact of the COVID-19 pandemic, HMRC gives taxpayers extra time to pay anything outstanding or set up a payment plan. Taxpayers can still set up a monthly payment plan online at GOV.UK. The online facility will allow you to spread the cost by making agreed monthly payments until January 2022.

To avoid any late payment penalties, you’ll need to do this by midnight, 1st April 2021.

How to set up a late payment plan

You can set up a payment plan online by logging in via your Government Gateway account. The link that advises you what to do is https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments, or you can call HMRC’s Payment Support Service: 0300 200 3835, Monday to Friday 8am to 6pm.

This instalment payment option is only available to taxpayers with less than £30,000 of taxes outstanding for payment.

Act now

If you still have self-assessment taxes unpaid and want to avoid the impending 5% late payment penalty, contact HMRC to organise a late payment plan before midnight 1st April 2021.

If you need to discuss the best way to approach HMRC, please call An Accounting Gem today on 01473 744 700, visit our website aag-accountants.co.uk or email contactus@accountinggem.co.uk.