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27 Feb 2022

Tips to file your 2020-21 tax return and avoid a £100 fine

Late tax return fines have been waived until midnight on 28 February - and time is running out

Monday 28 February is the final day self-assessors will be able to file 2020-21 tax returns without receiving an automatic £100 fine from HMRC.

Around 1.5 million people were yet to file their tax returns as of 21 February, according to HMRC. This is likely due to the tax authority's announcement at the start of January that its late filing charges would be waived throughout February.

If you haven't yet paid the tax owed for 2020-21, note that the interest being charged has now increased to 3% as of 21 February 2022, up from 2.75%. This rate of interest increased in line with the Bank of England base rate increase, which was announced on 4 February.

Here, Which? explains the latest self-assessment tax rules for those who haven't filed their 2020-21 tax returns, or paid their tax bills yet.

Five tips to file by 28 February

There's not much time left until the 28 February deadline, but it's still possible to get your tax return filed to HMRC and avoid a £100 fine.

1. Check your login details

First things first, make sure you can access the government website to file your tax return. You'll need your government gateway user ID and password.

If you've forgotten either of these, it's possible to reset them, but the process can take a little while - so don't leave this step until the clock is ticking down to midnight.

2. Get your paperwork together

If you're feeling the time pressure, you might want to sit at a computer and get started right away - but it will actually save time if you hold off and hunt down all of the paperwork, emails, invoices and bank statements you need first.

When all the information you need is there in front of you, you'll be able to fill out the details easily and you'll be less likely to make careless mistakes.

The specific things you'll need will depend on your circumstances, but things like your Unique Taxpayer Reference (UTR) number, P60, tenancy agreements and student loan statements will be useful.

3. Make sure you know your tax allowances

The allowances that were in place during the 2020-21 tax year will have an impact on how much tax you'll owe. To get an idea of what can be applied to your income, see our dedicated guides and calculators:

4. Don't forget your expenses

Some of the things you pay out for as part of your business or job can be deducted from your profit to reduce your tax bill. Other expenses can be claimed at a flat-rate and you can receive tax relief on what you've spent.

The expenses you can claim, and how to claim them, varies depending on your employment. See our guide to self-employed expenses you can claim if you work for yourself, or tax-deductible expenses if you're employed.

5. Estimate missing figures

If you're still missing figures that need to be included as part of your tax return, you're better off estimating them than filing late. HMRC will accept provisional figures, as long as you indicate this when you file.

The figures you provide should be your best estimate, as HMRC can charge fines if it believes you have been deliberately misleading.

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What late penalties could you face?

HMRC charges different penalties for late tax returns and late tax payments, meaning the money you owe can rack up pretty quickly.

The usual penalty timetable has been switched up this year to give people more time to sort their taxes, so make sure you know when the charges kick in.

If you submit your tax return by 28 February 2022

If you hit the 28 February deadline, you won't be charged any late filing penalties.

If you pay your tax bill at the same time, you'd have started accruing 2.75% interest on the tax you owe since 1 February, and 3% interest since 21 February.

If you submit your tax return on 1 March 2022

Tax returns filed after 28 February will be subject to an automatic £100 fine.

This fine increases by £10 a day for the next 90 days, and there are additional larger charges if you still haven't filed after six or 12 months.

If you pay your tax bill after 1 April 2022

Usually, HMRC issues a 5% charge on any unpaid tax on 3 March - for those who've failed to pay within 30 days after the 31 January deadline.

However, this year the charge won't be issued until 2 April.

This means that anyone who hasn't yet paid their tax should do so by the 1 April deadline.

What's more, if you're going to struggle to pay the tax you owe, 1 April is also the deadline for being able to set up a Time to Pay arrangement. This can be done online, as long as the following apply:

  • You owe less than £30,000 in tax
  • You have filed your 2020-21 tax return
  • Have no other tax debts
  • You plan to pay your debt off in the next 12 months or less.

If your tax bill is larger, or you need longer to pay back what you owe, contact the Self Assessment Payment Helpline on 0300 200 3822 to see if an alternative arrangement can be set up for you.

File your tax return with the Which? tax calculator

The Which? tax calculator is still available for anyone who hasn't yet filed a 2020-21 tax return.

You can use the easy-to-use online tool to tot up your tax bill, and it can also suggest allowances and expenses you may have forgotten.

When you're ready, you can also use the tool to file your tax return directly to HMRC.