The self-assessment deadline needs to be met by 31st January 2021 (midnight). You’ll definitely be getting a penalty if you don’t file the self-assessment on time. The late filing penalty on delaying self-assessment and hence delaying business tax is around £100. If you convince HMRC with a reasonable excuse, the late filing penalties may be exempted on you. Make sure that you’re done paying all the outstanding taxes that were due on you in 2019/2020. That normally happened because you decided to defer your second instalment of the amount due in 2019/2020. That should have been due on 31st July 2020. The government facilitated all the taxpayers in this regard, as COVID had a really bad impact on everyone. That’s why second payment on the account of 2019/2021 was due on 31st January 2021.
HMRC makes sure your business tax doesn’t cause you trouble. They’ve taken a couple of measures to support you. The latest measures by the government to avoid any late filing business tax penalties are quite impressive.
Take the deferment option. If someone decides to take up this option, the business tax for 2019/2020 will be the only liability at tax payer’s end (inclusive of class 2 and class 4 insurances). If you’ve decided to get done with the full amount in July instead of going for the deferment option, congrats you’re done paying your taxes. You don’t have to pay anything additional apart from that.
Let’s Understand this with an Example
Under class 4 national insurance liability, if your tax was around £1,000 for 2019/20 and less than 80 per cent of it has been collected as PAYE, your payments would be counted for 2020/2021. Each payment is 50% of the 2019/20 tax and Class 4 National Insurance liability. The first payment is due by 31 January 2021, along with any tax owing for 2019/20. The second payment should be paid by 31 July 2021.
2020 has been financially difficult for so many business owners. HMRC has been encouraging people to get done with their taxes on time, and not delay it despite giving comfort at most tax payers’ end. The dilemma for most taxpayers was that they were dealing with a lot of amount int this crisis. The instalment option was available for all these accountants. All of them are supposed to be get done with these by 31st January 2021.