HM Revenue & Customs will waive fines for late tax returns this year, with almost half of self-assessment taxpayers yet to hand in their paperwork ahead of the January 31 deadline.
The tax authority has effectively pushed back the annual tax return deadline to the end of February for a second year in a row, saying fines for late filing this year would be waived for 30 days.
Additional penalties for late payment, which normally apply a month after the January 31 deadline, will also be waived for a month, the tax office said.
It took the decision after it became clear millions of people were struggling to get their returns in on time. Just 6.5 million people out of the 12.2 million required to submit a tax return this year have done so.
It follows urgent pleas for an extension made this week, with accountants reporting widespread staff shortages caused by the spread of omicron. They said this was making it impossible for professionals to meet the cut off date, meaning taxpayers faced being unfairly punished for their accountants being off sick.
Late filing results in an immediate £100 fine and can snowball into the thousands if left unpaid, as additional penalties and interest build up.
Financial Secretary to the Treasury Lucy Frazer said the Government understood omicron was “putting people under pressure” and said the move would provide “breathing space” for millions of people. She said the break on fines would “help ease financial burdens and protect livelihoods as we navigate the months ahead”.
Accounting trade bodies and representatives of the self-employed welcomed the announcement. They said it would help alleviate the pressure caused by the cost of living crisis, soaring inflation and spiralling energy bills.
HMRC said the deadline to file and pay remained January 31, but the penalty waivers will mean anyone who cannot file their return by the deadline will not receive a late filing penalty, as long as they file online by February 28 at the latest.
Anyone who cannot pay what they owe by the end of the month will not receive a late payment penalty, as long as they clear their debts in full, or set up a payment plan with the tax office, by April 1.
The tax authority made a similar announcement last year during the pandemic, when a record 1.8 million people failed to sort their taxes on time.