Self-employed? Don't miss 31 January self-assessment tax return deadline

Update 25 January 2021: HMRC has now said it will waive fines for anyone who files by 28 February 2021. See our latest MSE news story for the full info.

There are three separate issues at play here, and they all have deadlines of 11.59pm on 31 January 2021:

• Firstly, eligible taxpayers who haven't already done so need to file an online self-assessment tax return to HMRC for the 2019/20 tax year, which ended on 5 April 2020. This deadline hasn't changed and is the same as always.

• Secondly, if you were due to make an 'on account' (ie, advance) payment by 31 July 2020 – and not everyone has to – the Government gave you an extra six months to pay, but that runs out on 31 January 2021 unless you've agreed a separate repayment plan with HMRC. This payment is meant to cover roughly half of your 2019/20 bill and is calculated by using half of your actual bill for the 2018/19 tax year. 

   

• Thirdly, you'll need to pay any remaining tax owed from the 2019/20 tax year (known as a balancing payment) – unless you've also agreed a repayment plan – as well as make your first payment on account for the 2020/21 tax year.

You'll be hit with a fine of £100 if your tax return is up to three months late – and you'll have to pay more if it's later, or if you pay your tax bill late. You'll also be charged interest on late payments. Below we round up what you need to know. Also see our Coronavirus Self-Employed Help guide for more info if you're struggling.

Who needs to file a self-assessment tax return?

Most UK taxpayers have their taxes deducted automatically from their wages, pensions or savings, and won't need to file a tax return. But tax returns are due from individuals or businesses who haven't had tax automatically deducted, or who have earned extra untaxed income.

You'll need to submit a tax return if any of the following applied to you in the 2019/20 tax year:

• You were self-employed and your income was more than £1,000.

• Your income was more than £50,000, and you or your partner claimed child benefit.

• You earned more than £2,500 from renting out property, or from other untaxed income such as tips or commission.

• You earned more than £100,000 in taxable income.

• You earned £10,000 or more before tax from savings, investments, shares or dividends.

• You earned income from abroad, or lived abroad and had a UK income.

• You need to pay capital gains tax.

• You received income from a trust.

• Your state pension was more than your personal allowance and was your only source of income (unless you started getting your pension on or after 6 April 2016).

• HMRC has told you that you didn't pay enough tax last year (and you haven't already paid up through your tax code or voluntary payments).

• You filed a self-assessment tax return last year (even if you didn't owe any tax). You'll need to do this unless HMRC has already written to you to say you don't need to file one.

How do I register to file my tax return online?

The deadline to register for a self-assessment tax return was technically 5 October 2020 – but generally you'll be OK if you register now, as long as you file the tax return itself before the deadline.

If this is your first time filing a return, you can register by visiting the HMRC website.

HMRC will then set up your self-assessment online account and send you a letter with your unique taxpayer reference – a 10-digit code which you'll need the first time you log in.

It's crucial you register ASAP, as it can take up to 10 working days for you to receive your reference number.

If it's your first time filing online but you already have a reference number – for example, because you've previously filed a paper return – you should be able to skip this step and just register for the online service.

What if I've lost my login/password details?

You'll need to log into your self-assessment account with your Government Gateway ID or using Gov.uk Verify.

• Forgotten your Government Gateway details? You can retrieve your user ID or reset your password online.

• Forgotten your Gov.uk Verify details? You'll need to use the forgotten username or password function of the provider which has verified your identity. See Gov.uk for more.

If you're signing into your self-assessment account for the first time and have forgotten your unique taxpayer reference number, you should be able to find it on previous tax returns or on other documents from HMRC, such as payment reminders. It's also available on your HMRC online account.

If you can't find your unique reference, you can phone the self-assessment helpline on 0300 200 3310.

Can I file a paper return instead?

The deadline for filing paper returns was 31 October 2020 – so you must file your return online to avoid paying a penalty. If you were to file a paper return now you would be fined.

How do I make my payments 'on account'?

You can pay your tax bill by bank transfer, debit card or cheque. You can also pay at your bank or building society if you have a paying-in slip from HMRC.

HMRC accepts money under the Faster Payments system, which allows cash to go through in two hours. However, each bank has a limit on how much you can transfer under Faster Payments. The limits range from £5,000 to £100,000. See each provider's limit.

You can no longer pay the bill using a personal credit card or at the post office.

What if I've signed up to a repayment plan?

Those who owe tax of less than £30,000 (and more than £32) in January 2021 (so that'd be the deferred July payment and January 2021's 'on account' payment) have been able to use HMRC's 'Enhanced Time to Pay' mechanism to agree a repayment plan to spread that tax bill and repay it by direct debit over up to 12 months – even if that goes beyond the 31 January 2021 deadline.

To use this service, you need to have filed your 2019/20 tax return by the 31 January 2021 deadline and set up the repayment plan no later than 60 days after the due date of a debt. In addition, you need to have no outstanding tax returns, other tax debts or other payment plans set up. You can set up a Time to Pay plan online through your tax account, or you can call HMRC on 0300 200 3822 (open Monday to Friday, 8am to 4pm).

However, bear in mind that those who use this system will pay simple interest (meaning it doesn't compound) of 2.6% a year from 1 February 2021 until their bill has been repaid in full.

What if I can't afford to pay the tax?

If your bill is correct but you find you can't afford it, contact HMRC as soon as possible, as you may be able to avoid late payment penalties by coming to an arrangement to spread your payments over a period of time. (Also see our Free Tax Code Calculator to ensure you're on the right tax code).

You'll need a reasonable excuse for not paying your tax on time. This is usually something unexpected or outside your control that stopped you meeting a tax obligation. For example:

• Your partner or another close relative died shortly before the tax return or payment deadline.

• You had an unexpected stay in hospital that prevented you from dealing with your tax affairs.

• You had a serious or life-threatening illness.

• Your computer or software failed just before or while you were preparing your online return.

• Issues with HMRC's online services.

• A fire, flood or theft prevented you from completing your tax return.

HMRC has also confirmed that if someone is unable to file because of the impact of Covid-19 that this will be accepted as a reasonable excuse, and any penalties will be cancelled provided you manage to file as soon as possible after that.

What if I miss the deadline?

You'll be charged a £100 penalty if you fail to submit your return by the deadline – even if there's no tax to pay.

Further penalties of £10 a day are applied after three months, up to a maximum of £900. After six months, you'll get a further penalty of 5% of the tax owed or £300 (whichever is greater), which is repeated at 12 months.

There are also extra penalties for paying the tax late – these will be charged at 5% of the unpaid tax after 30 days, six months and 12 months. Plus, interest at 2.6% is applied to unpaid taxes straight away. 

The Government provides an online tool for calculating how much you'll need to pay in penalties and interest if you miss the deadlines.

Who should I contact for further advice?

The Government provides help sheets and videos for guidance on submitting your tax return.

You can also contact HMRC for advice directly by calling the helpline on 0300 200 3310. It's open from 8am to 8pm on weekdays, 8am to 4pm on Saturdays and 9am to 5pm on Sundays. You can also get general help from HMRC customer support on Twitter.

HMRC to waive fines for people who file late tax returns due to coronavirus 

Anyone who needs to file an annual self-assessment tax return online could avoid paying a penalty fee if they miss this month's deadline due to coronavirus-related reasons, HMRC has said – though penalties for paying tax late will still apply. 

Those who file one later than that would usually have to pay a fine. But this year HMRC says it will accept pandemic-related personal or business disruption as a "reasonable excuse" for being unable to file on time, and it'll cancel penalties as long as you file as soon as possible after that. 

The taxman has, however, been vague on what exactly counts as a valid coronavirus-related reason. HMRC won't give us any specifics, and says only that it'll look at each situation on a case-by-case basis – so it's unclear, for example, if you can file late because you ran out of time due to homeschooling. If you can, it's still best to file on time to be safe. If you're struggling due to coronavirus, but are unsure if you've a valid excuse, contact HMRC directly to check.

In reality, many who file late due to coronavirus may still have to pay a fine if they are late paying their tax, as the penalties for that remain unchanged – though they don't kick in until 30 days after the 31 January 2021 deadline. See our HMRC to waive fines for people who file late tax returns due to coronavirus – but you'll still be fined for late payment MSE News story.