| Taxpayers who believed they were given a reprieve this week will be in with a nasty shock. On Monday HM Revenue and Customs announced that there would be no fines for people returning their online tax return late, so long as it is submitted by February 28. The original deadline was January 31.
However, for those who have lost income during the pandemic and are struggling to pay, the situation is as dire as ever. The taxman warned people they will still need to settle up by the new deadline or be charged interest.
The first payment on account, made up of the rest of the previous tax year’s bill and part of the coming year, is still due on January 31.
Taxpayers who cannot afford to pay on time can apply to spread it over 12 months, HMRC said, but they will need to have filed their return in order to apply. Around three million people are yet to submit their tax return, just days before they are due to pay up. Many are holding off because they are struggling to find the cash.
As revealed by Harry Brennan this weekend, taxpayers have amassed 4bn of debt. Almost 650,000 people had asked to be put on HMRC’s Time To Pay payment plans, designed for people who cannot meet their tax bills on time, by the end of June 2020. Their unpaid debts totalled 6,400 on average.
Many will now be hit with interest charges of 2.6pc and will be facing arrears for months or years. The number of people unable to pay up is only expected to grow.
One reader, an events speaker, was forced to dip into his pension two days after he turned 55 last year to cover his day-to-day costs and deferred tax payments. He has already burned through money set aside to pay his mortgage.
When people are unable to pay their tax bills, it is bad news for all of us as the Government is desperately trying to find ways to plug the gaping hole in its coffers. How will it cover the shortfall? There were rumours last week of a new property levy, but Sam Brodbeck argues that a wealth tax is far more likely. Read why here.
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