Two million taxpayers miss the self-assessment tax return deadline

Around two million self-assessors missed the 31 January deadline to file their 2020-21 tax returns, according to HMRC.

The tax authority says that more than 10.2m people filed their returns by midnight on 31 January, but it was expecting around 12.2m tax returns to be filed in total.

The £100 penalty for a late tax return has been waived throughout February, but anyone who has not yet paid the tax they owe for 2020-21 will now face 2.75% on any outstanding tax.

Here, Which? explains when late penalties will kick in this year, and why it's still a good idea to file your tax return as soon as possible.

When will you be charged late filing penalties?

In normal circumstances, a £100 fine would be charged from 1 February if you didn't have a valid excuse for it being late.

This year, HMRC is assuming a valid excuse for anyone who misses the 31 January deadline - but the charges will kick in as usual if you don't file by midnight on 28 February.

This will work as below:

• One day late (1 March 2022): £100 fine
• Up to three months late (30 April 2022): £10 each day, capped at 90 days (plus initial £100 fine)
• Six months late (31 July 2022): 5% of the tax due, or £300 - whichever is higher
• 12 months late (31 January 2023): 5% of the tax due, or £300 - whichever is higher.

Fines for late tax payments are separate - and in addition to - late filing charges.

• Find out more:late tax returns and penalties for mistakes

What happens if you pay your tax bill late?

If you still owe tax for 2020-21, you'll be charged 2.75% interest on the outstanding amount from 1 February.

HMRC has waived the late payment charge that would usually kick in on 2 March - but if you don't pay what you owe, or set up an arrangement to pay, by 1 April, then the usual charges will be issued.

The late payment charges will work like this:

• From 1 February 2022: 2.75% interest charged on outstanding tax
• From 2 April 2022: a charge equal to 5% of the tax due
• Six months late (31 July 2022): a further 5% charge
• 12 months late (31 January 2023): another 5% charge

If you're unable to pay the tax you owe on time, you may be able to set up a Time to Pay arrangement via HMRC's online portal.

This is suitable for those who:

• Owe less than £30,000
• Have filed their 2020-21 tax return
• Be able to pay off what they owe in the next 12 months.

If the points above don't apply to you - perhaps you need longer to pay, or you owe more than £30,000 - then it's best to call HMRC on 0300 200 3822 to see if an alternative arrangement can be set up.

Should you have filed a tax return?

There are cases where people fail to file their tax return on time because they didn't realise they needed to submit one at all.

An FOI request last year found that an increasing number of people were child benefit claimants, who were unaware of falling under the scope of the high-income child benefit charge.

This applies if the person claiming child benefit, or their partner, earns £50,000 or more. For each £100 earned above £50,000, you'll have to pay the equivalent of 1% of the tax you've been paid.

The child benefit payments must be included on a self-assessment tax return, and HMRC will then calculate how much extra tax you owe.

Those who earn £60,000 or more will have to repay all of the child benefit payment.

However, it can still be worth claiming child benefit - but opting out of the payment. This is because parents taking time off work to look after a child can still receive National Insurance credits - this will plug any gaps in contributions that might affect state pension payments further down the line.

• Find out more: how to fill in a self-assessment tax return

Tot up your tax bill with the Which? tax calculator

If you haven't filed your 2020-21 tax return, you can still use the Which? tax calculator for the task.

You can calculate how much tax you owe from a range of income sources, and it will even suggest allowances and expenses you might have forgotten.

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