Late Payment Penalty – Don’t get caught out!
The payment deadline for the second payment on account for 2020/21 is 31 July 2021. Failure to meet this deadline will result in interest being charged at the rate of 2.6% by HMRC from 1 August 2021 until the outstanding amounts are settled.
Given the current situation many taxpayers may also have tax outstanding from 31 January 2021 in relation to both the 2019/20 balancing payment and the first payment on account for 2020/21. If there is an amount outstanding in relation to 2019/20 then a further late payment penalty of 5% will accrue on any amount not settled before 1 August 2021, this is despite the previous late payment penalty deadline being pushed back to 1 April 2021.
It is important that any clients with tax liabilities outstanding for 2019/20 either settle these in full or enter into a time to pay arrangement with HMRC before 1 August 2021.
If outstanding liabilities are under £30,000 then time to pay arrangements can be set up with HMRC online, otherwise a call to HMRC will be necessary.
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