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Avoid £100's worth of Self Assessment penalties

Arif Patel

Arif Patel | Accountancy & Tax Service Director

Monday 4th Jan, 2021

For Personal Service Company directors in the contracting industry, and indeed small businesses in general, the start of a new year brings with it some tedious but essential tasks.

Directors of limited companies are invariably registered within the income tax Self Assessment system and have to complete a Self Assessment Tax Return each year.

They also need to pay their personal tax bills for the previous tax year on or before the following 31st January. So, for the tax year which ended 5th April 2020, a Tax Return was required by 31st January 2021. The balance of any personal tax liabilities for 2019/20 should also have been paid by 31st January 2021.

HMRC has a range of financial penalties, some of which are applied automatically, for those who fail to file their tax return by the deadline date. These penalties begin at £100 and increase with time if the failure to file continues. Added to these filing penalties, there are normally interest and late payment charges if the tax itself is paid late.

However, HMRC have advised that they have extended their filing deadline. Individuals now have until 28th February 2021 to submit their tax return before they incur the £100 late filing penalty. Interest will however still be accrued on any liability that is due, so we recommend that payment is made as soon as possible.

In a bid to help individuals affected by COVID-19 HMRC introduced a ‘time to pay’ service which enables individuals to spread the payment over an agreed period of time. Individuals have 60 days from the 31st January to submit a time to pay claim but this can only be submitted if the self assessment tax return has been filed and there are no outstanding returns from previous years. HMRC have an online facility to enable taxpayers to make such a request.

In order to be able to file a Self Assessment tax return and pay any tax due on time, new directors, sole traders and others who have income which has not been taxed at source, need to ensure that they have registered with HMRC beforehand. Strictly, registration for Self Assessment with HMRC for the first time for the 2019/20 should have been completed by 5th October 2020 and a Unique Taxpayer Reference (UTR) obtained. This UTR is used to both file a return and make any payment to the correct account.

If you need any help in obtaining this registration or with completing and filing your Self Assessment Tax Return, please don’t hesitate to ask about PayStream’s Tax Return Service.

You can contact the tax team on 0161 926 7875 or via email at or
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We'll make sure your tax return is completed correctly and on time to keep you safe from HMRC's new tax penalties - but we'll also chase any refunds that you might be due and warn you of any possible tax liabilities we identify during the process, so you know exactly what lies ahead.

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