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31 Jan 2022

Seven ways to file your 2020-21 tax return by the 31 January deadline

You'll be charged interest on unpaid tax from 1 February

HMRC has announced it will temporarily waive the late penalties taxpayers usually face if they miss the 31 January filing and tax payment deadline - but it still pays to deal with your 2020-21 tax on time.

That's because interest will begin to rack up from 1 February on any unpaid tax, charged at 2.75%.

On 24 January, HMRC said it was still waiting for 4m people to file their tax returns; almost a third of the 12.2m tax returns it's expecting.

Here, Which? reveals how to get your tax return filed quickly and accurately.

1. Check you can access your tax account

If you're planning to file your return via gov.uk, it's a good idea to check that you can access your tax account before you're ready to file, as any problems could take a while to be rectified.

To access your tax account, you'll need your government gateway user ID - which is usually a series of 12 numbers - and your password.

Your government gateway user ID will have been emailed to you when you first set up your account, so search your inbox if you don't have it to hand.

If you can't find your user ID, or you've forgotten your password, it's possible to recover them both, but you might have to answer extra personal questions to prove your identity.

You'll also need to know your UTR number when you come to file your return. It's a 10-digit number that sometimes ends with a 'K'. If you can't find it, there's a separate process for finding it.

2. Hunt down any relevant paperwork

Before you sit down and concentrate on the task at hand, make sure you've got all the information you'll need in front of you.

Being able to complete the process without having to keep stopping to look for documents and figures at each stage will be quicker and less stressful.

What's more, fewer interruptions could also mean you're less likely to make a careless mistake - which could land you with a fine if HMRC thinks you haven't taken 'reasonable care' over your tax return.

The precise paperwork you'll need will depend on your circumstances, but could include things like bank statements, invoices, receipts, a P60 or P45, a student loan statement or tenancy agreements.

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3. Don't panic over missing receipts

If your hunt for paperwork ended with missing receipts for expenses you want to claim, there may be ways around it.

For instance, a bank statement or email confirmation of the purchase are also means of showing what you spent.

Alternatively, some expenses can be claimed as a flat-rate, with no need to provide evidence of expenditure. This includes claiming mileage for business travel, claims to cover costs of working from home, or for maintaining a work uniform.

The only thing is, the amount covered might be less than what you paid - if you want to claim more, then you will need proof of what's been spent.

4. Estimate any missing figures

If you've found there are some missing figures in your records, it's better to submit estimated or provisional figures rather than miss the filing deadline.

You must indicate that the figures are estimates; HMRC will take this into account when assessing your return. Also, note that the figures you submit should be your best estimate, as HMRC has the power to charge you a penalty if it thinks the figures you've provided are deliberately misleading.

When the figures have been confirmed, you can go back into your tax return and change them.

5. Factor in your expenses and allowances

Making sure you've applied all of the expenses and allowances you're entitled to will save you from having to pay more tax than you need to.

Our range of tax guides can help you brush up on your tax knowledge, including whether you need to consider any of the following:

For an overview of all tax allowances, see our guide on tax-free income and allowances.

6. Choose how to pay your tax bill

If you want to avoid being charged interest on the tax you owe, you'll need to make sure HMRC receives your payment by midnight on 31 January.

With so little time left, this means you'll need to pay by online or telephone banking, Chaps, debit card or in-branch at your local bank or building society - all other forms of payment run the risk of making your payment late.

If you're not able to pay the tax you owe in one go, you might be eligible to set up a Time to Pay arrangement. To do this online, you must:

  • owe less than £30,000 in tax
  • have filed your 2020-21 tax return
  • be able to repay the tax you owe in 12 months.

If this criteria doesn't apply to your situation, you can call HMRC's Payment Support Service on 0300 200 3835 to see if an alternative arrangement can be drawn up.

7. Consider using an online tool

You can submit your tax return via the government website - but other online tools can also help you calculate your tax bill and submit your information.

The Which? tax calculator, for instance, is totally jargon-free, and suggests expenses and allowances you might have forgotten about.

When you're done, you can use the tool to submit your return directly to HMRC.

What happens if your tax return or payment is late?

There are separate fines for submitting a late tax return, and paying your tax bill after the deadline - but these have changed up a bit this year due to HMRC's decision to temporarily waive some charges.

If your tax return is late

Usually, HMRC would issue £100 late fines for any tax returns not received by 31 January. This year, however, you can file your tax return up until 28 February 2022 without incurring a fine.

Returns received from 1 March 2022, could receive a £100 fine. The fines then continue to mount up the later you are:

  • Up to three months late: £10 a day (capped at 90 days), plus initial £100 fine
  • Six months late: 5% of the tax you owe, or £300 - whichever is larger - plus the fines above
  • 12 months late: 5% of the tax you owe, or £300 - whichever is larger - plus the fines above

If your tax payment is late

HMRC is still charging interest on late tax payments, but the usual 3% charge that's levied around 2 March has been waived until 1 April.

To avoid this fine, HMRC must have either received the tax you owe for 2020-21, or you must have set up a Time to Pay arrangement, by midnight on 1 April 2022.