Originally written by Timothy Adler on Small Business
HMRC is giving the self-employed more time to file their tax return if they give Covid as an excuse for late filing.
This year, almost 12m self-employed people, those with second forms of income and landlords are due to file a personal tax return by the end of January.
Almost 5.5m of those 12m self-assessment taxpayers are yet to submit returns, with weeks to go before the deadline.
>See also: Prospect union calls for emergency help for excluded self-employed
However, the taxman is developing a simplified “Covid excuse” form that will allow the self-employed to miss the January 31 deadline for filing and paying tax.
It will allow those who say they have a reason for late filing due to the pandemic to avoid stiff penalties, with the Sunday Times quoting sources that HMRC is planning a “very lenient” attitude.
The decision will be a boost for millions of self-employed people who put money aside to pay income tax at the end of the year but have had to use their savings to stay afloat.
Freelancers’ incomes fell 30 per cent to record lows last year, according to the freelancer body IPSE. One in five self-employed people will have to borrow money to pay their tax bills, IPSE said.
>See also: City mayors warn of mental health pandemic among self-employed
Meanwhile, Rishi Sunak, the chancellor, is reportedly considering extending the deadline for all taxpayers, perhaps until March.
Penalties for late filing usually start at £100 for three months and then, if you have not filed by April 30, an additional penalty of £10 a day from then on, up to £900. If you file six months late you usually face a penalty of £300, or 5 per cent of tax owing if that is greater, and if you are 12 months late you will be charged another £300, or 5 per cent.
Even if you successfully appeal to avoid late-filing penalties, you will still face penalties for late payment. These are 5 per cent of tax unpaid after 30 days, another 5 per cent after six months and a further 5 per cent after 12 months.
About 3m people have also found themselves excluded from any kind of government financial help.
Excluded UK, a campaign group representing the 3m excluded from the Self-Employment Income Support Scheme (SEISS), are demanding that their members have their 2019-20 tax bills waived as compensation.
Phil Hall of the Association of Accounting Technicians (AAT) told the Daily Telegraph: “Three lockdowns and the tier regime have certainly restricted many people from getting their tax information to their accountants in the usual way. When you add in the impact of illness due to coronavirus it’s pretty obvious that the number of taxpayers filing late this year is going to be much higher than in previous years.”
HMRC told the Sunday Times: “We want to encourage as many people as possible to file on time even if they can’t pay their tax straight away. But where a customer is unable to do so because of the impact of Covid-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.”
Further reading
Checklist for going self-employed – a Small Business guide
Taxman gives self-employed more time to file your tax return
via https://ift.tt/2Jn9P8X by Timothy Adler, Khareem Sudlow
