HMRC is phasing in a new regime for penalties for late tax payments starting next year.

This will start with VAT payments from 1 April 2022 (for accounting periods beginning on or after 1 April 2022), followed two and three years later by some self-assessment tax payments.

The new rules are set to be:

  • You won’t be charged a penalty if you pay your tax bill in full within 15 days after the date the payment was due
  • If you pay later than 15 days after, a penalty of 2% of the tax owing will be charged
  • After 30 days from the due date a further penalty of 2% applies of the tax owing beyond day 15, plus another 2% of the tax owing at day 30

However, HMRC has said that it will take a “light touch approach” for the first year of the new penalty regime starting in April 2022 for VAT and 2024 and 2025 for income tax. During this initial year, it won’t charge a penalty if you get in touch to agree terms of payment within 30 days of the tax due date.

As ever, we recommend that you approach HMRC to agree a timetable for payment as soon as you realise you won’t be able to settle your tax bill on time. As long as you stick to this timetable, you will avoid a late payment penalty. 

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