HMRC is again giving self-assessment taxpayers an extra month to complete their tax return and pay any tax due for the 2020/21 tax year.

Late-filing and late-payment penalties will be waived for returns during February 2022. Normally, a 5 per cent late payment penalty is charged on any unpaid tax that is still outstanding on 3 March. This year, HMRC is giving taxpayers more time to pay or set up a payment plan. Self-assessment taxpayers will not be charged the late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April 2022. However, interest will still be charged on payments that are due by 31 January but that have not been paid. The late payment interest rate is currently 2.75 per cent.

Moreover, a return received online in February will be treated as a return received late, albeit with a valid reasonable excuse for the lateness. This means that there will be an extended enquiry window if HMRC wishes to challenge the return.

A similar concession was made in 2021, although it was not announced until late in January 2021. By then, the low-filing rate made it clear that some taxpayers and agents could not file in time, with over three million returns still overdue by 25 January...