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Tax returns: 4 million still to file self assessment, says HMRC

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Tax returns: 4 million still to file self assessment, says HMRC
HMRC is urging millions of customers who are still to file their tax return, pay any outstanding liabilities or set up a payment plan, to do so ahead of the deadline. Photo: Matthew Lloyd/Getty

Four million Brits have still not submitted their completed self assessment tax return ahead of the 31 January deadline, HM Revenue and Customs (HMRC) has warned.

HMRC is urging those who are still to file their tax return, pay any outstanding liabilities or set up a payment plan, to do so ahead of the deadline to avoid paying interest on all outstanding balances from 1 February.

HMRC has, like last year, waived penalties on late tax returns until 28 February and late tax payments until 1 April.

This means that anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February. Similarly, anyone who cannot pay their tax liabilities by the 31 January will not receive a late payment penalty if they pay their tax in full, or set up a payment arrangement, by 1 April.

Lucy Frazer, financial secretary to the Treasury, said: "We recognise that Omicron is putting people under pressure, so we are giving millions of people more breathing space to manage their tax affairs.

"Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead."

Read more: Brits to rack up '25 million hours filing tax returns'

However, self-assessors will still be charged 2.75% interest on unpaid tax from 1 February.

Those unable to pay their tax bill can split their bill into smaller instalments using HMRC's Time to Pay service. Self assessment taxpayers with up to £30,000 of tax debt can do this online once they have filed their return.

More than 12.2 million customers are expected to complete a tax return for the 2020/21 tax year, according to HMRC.

Myrtle Lloyd, HMRC’s director general for customer services, said: “We know some customers may struggle to meet the self assessment deadline on 31 January which is why we have waived penalties for one month, giving them extra time to meet their obligations.

“And if anyone is worried about paying their tax bill, they can set up a monthly payment plan online — search ‘pay my self assessment’ on GOV.UK.”

Consumer group Which? revealed that Brits were set to rack up 25 million hours filing tax returns, with the average time taken to complete a return coming in at more than two hours, in a survey of 4,000 self-assessors.

Some 8% of respondents said it took them more than five hours.

Read more: Majority of Brits won’t be able to save in 2022 due to higher bills

James Andrews, senior personal finance editor at Money.co.uk said: “While the extension is good news for anyone struggling to submit their online tax return on time, you should not use it as a reason to delay starting the process. It can be long and complicated with masses of paperwork, so if you can, you should still aim to have everything in place by 31 January.

“One of the most common mistakes made with tax returns is an incorrect tax code, so even if you think this doesn’t apply to you, it’s a good idea to check your tax code anyway, just to be sure. If HMRC has the wrong details then you could be paying too much, or too little, so check you have the right code before it’s too late.

“If you have never sent an online tax return before, the first thing you need to do is register with the government website. This process can take up to three weeks, so if you are registering for the first time, you still have time due to the HMRC extension.

“Once you have registered, you can sign in and use the free HMRC self assessment online service on the government site to submit your tax return. To complete the forms, you’ll need to gather all the relevant paperwork and documents, which can include your P60, P45, P11D or a P9D. You might also need to provide a summary of any rental income and expenses or statements of earnings from savings and investments."

Mistakes in submitting your tax return can be amended by submitting an amendment in writing or via the HMRC website. "However, if this does happen to you, remember you only have 12 months to complete the process," said Andrews.

“If you’ve overpaid tax it’s relatively easy to claim it back. You shouldn’t need to use a third-party company, in fact, you can check whether it’s worth claiming a tax rebate for free using the HMRC tax checker."

Self assessment timeline:

  • 31 January — self assessment deadline (filing and payment)

  • 1 February — interest accrues on any outstanding tax bills

  • 28 February —last date to file any late online tax returns to avoid a late filing penalty

  • 1 April — last date to pay any outstanding tax or make a Time to Pay arrangement, to avoid a late payment penalty

  • 1 April — last date to set up a self-serve Time to Pay arrangement online

Watch: What is national insurance and do I have to pay it?

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