HMRC is waiving late filing and late payment penalties for Self-Assessment taxpayers for one month – giving them extra time, if they need it, to complete their 2020-21 tax return and pay any tax due.

HMRC is encouraging taxpayers to file and pay on time if they can, as the department reveals that, of the 12.2 million taxpayers who need to submit their tax return by 31 January 2022, almost 6.5 million have already done so.

HMRC recognises the pressure faced this year by Self-Assessment taxpayers and their agents. COVID-19 is affecting the capacity of some agents and taxpayers to meet their obligations in time for the 31 January deadline. The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.

The deadline to file and pay remains 31 January 2022. The penalty waivers will mean that:

· anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February,

· anyone who cannot pay their Self-Assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April 2022.

Interest will be payable from 1 February 2022, as usual, so it is still better to pay on time if possible.

HMRC has confirmed that four million out of twelve point two million taxpayers have yet to file their 2020-21 self-assessment tax returns. Which means that an equivalent proportion of taxes due 31 January 2022 will remain unpaid; at least for the foreseeable future.

We have reported on our blog earlier in January 2022, that HMRC will allow a further month, until 28 February 2022, for unfiled 2020-21 returns to be filed without incurring a late filing penalty.

And further, anyone who cannot pay their tax liabilities by the 31 January 2022 deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April 2022.

Which begs the question, why bother filing a return earlier in the tax cycle?

Two reasons for filing – or preparing a return for filing – earlier in the tax cycle, are:

• Preparing a 2020-21 return quantifies any income tax or NIC that will need to be paid on 31 January 2022. In a nut-shell, taxpayers who prepare their returns shortly after the end of the relevant tax year, will have more time to save funds to clear tax due the following January. In theory you could prepare your 2020-21 return during April 2021 which would give you nine months to save for any tax due.
• The 2020-21 return will reveal any balance of taxes due for 2020-21 and also set the amount of any payments on account for 2021-22 (these payments on account are due 31 January and 31 July 2022). If you consider that taxable earnings in 2021-22 are going to be lower than those during 2020-21, you can elect to reduce payments on account for the later year.

The four million taxpayers, who we are advised are still to file for 2020-21, may be in for a shock when their liabilities are finally revealed in the coming month. Although HMRC have been generous in forgoing late filing and late payment penalties for restricted periods, interest will still be charged on tax paid after due dates.

We have all suffered from the impact of the pandemic to some degree, either personally or in a business capacity in the last two years, but the old maxim, be prepared, still holds water; and we would advise all taxpayers to adopt the sooner rather than later approach when they come to consider tackling their self-assessment tax returns for 2021-22.

In between the other political distractions of the last few weeks, England has returned to the COVID measures set out in Plan A. This means:

• The government is no longer asking people to work from home if they can. People should now talk to their employers to agree arrangements to return to the office.
• Face coverings are no longer advised for staff and pupils in secondary school and college classrooms.
• Face coverings are no longer advised for staff and pupils in communal areas of secondary schools, nor for staff in communal areas of primaries.
• There is no longer a legal requirement to wear a face covering. The government suggests that you continue to wear a face covering in crowded and enclosed spaces where you may come into contact with other people you do not normally meet.
• Venues and events are no longer required by law to check visitors’ NHS COVID Pass. The NHS COVID Pass can still be used on a voluntary basis.

High Street traders and businesses in the hospitality and entertainment sectors will welcome these changes as they are desperate to return to pre-COVID trading conditions.

Regional variations

Wales

From 28th January changes are:

• nightclubs will be able to re-open
• COVID Pass needed for large indoor events, nightclubs, cinemas, theatres, and concert halls
• working from home remains important but moves from law to guidance
• in hospitality, no restrictions on meeting people and no requirement for table service or 2 metre physical distancing
• face coverings still required on public transport and in most indoor public places

Scotland

Current published regulations are:

• get the vaccine or the vaccine booster,
• if you don’t have symptoms take regular lateral flow tests – especially before mixing with other people and visiting hospitals and care homes,
• if mixing with others keep gatherings small – keep your distance from people not in your group,
• if you have symptoms – self isolate and book a PCR test,
• wash your hands regularly, and cover your nose and mouth if coughing or sneezing,
• open windows when meeting indoors,
• a mixture of home and office working is allowed,
• use the apps: COVID status (vaccine passport), Protect Scotland and Check-in Scotland.

Northern Ireland

The current range of COVID-19 regulations for Northern Ireland are best reviewed on the https://nidirect.gov.uk website.