Here's why HMRC won't fine you for filing a late tax return (but they will if you don't pay on time)

The deadline for completing a 2019/20 self-assessment tax return online is Sunday January 31, and usually, those who file later would have to pay a fine. 

However, HM Revenue and Customs (HMRC) has said that this year it will accept pandemic-related personal or business disruption as a "reasonable excuse" for being unable to file on time, and will cancel penalties as long as you file as soon as possible after that. 

HMRC has, however, been vague on what exactly counts as a valid coronavirus-related reason, saying it will only 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.

Despite the fine waiver for filing late due to coronavirus, if you are late in actually paying your tax then you may have to cough up a penalty. 

Here, Martin Lewis' Money Saving Experts explain:

What's the usual penalty for filing a tax return late?

Under HMRC's usual rules, if you miss the January 31 deadline you'll be charged £100 – 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 also be charged 5 per cent of the tax owed or £300 (whichever is greater), and this happens again after 12 months.

How do I ask HMRC to waive any fines for filing late?

Unfortunately, there's currently no way of getting out of a fine in advance, so if you file late because you're affected by coronavirus you'll need to appeal against the penalty after you've been hit with it.

If you are fined, HMRC will send you a letter telling you about the appeals process, and you will need to follow this – explaining why coronavirus meant you were unable to file on time – to overturn these fees.

If you're fined £100 for filing late, you can appeal via Gov.uk or by post.

You'll need to set up a Government Gateway account if you do not have one to appeal online.

For other penalties, you need to appeal by post, sending a completed 'SA370 form' or letter explaining your appeal to HMRC's self-assessment department. 

You get a total of four months to appeal from the date of the penalty.

See Gov.uk for full details, including the postal address to use. 

HMRC does say it is currently looking at changes it could introduce to make the appeals process easier and quicker for taxpayers to use – so the process for this may change in the coming weeks.

Fees WON'T be waived if you pay your tax late due to coronavirus

HMRC says late payment penalties will operate as normal as things stand, so it won't waive fines as a matter of course if you've been unable to pay due to coronavirus (as usual though, you can still appeal fines if you believe you have a "reasonable excuse" for not paying on time). 

Of course, many may struggle to pay the correct amount of tax if they haven't also filed their return – so if you can file a return and pay your tax by January 31, it's best to do so.

If you don't pay on time, as above, penalties for late payment don't kick in immediately after January 31 – you'll be charged 5 per cent of the unpaid tax after 30 days, plus 5 per cent after six months and again after 12 months.

So if you miss the deadline, sort it as soon as you can and you may still be able to avoid a fine. 

If you were due to make an 'on account' (ie, advance) payment by July 31 2020 – and not everyone has to – the Government gave you an extra six months to pay, but that runs out on January 31 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.

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

What if I'll struggle to pay my tax on time?

As above, it's worth bearing in mind that penalties for late payment aren't charged until 30 days after the January deadline.

But if you think you'll struggle to pay what you owe in time, you can use HMRC's 'Time to Pay' arrangement to set up a repayment plan. 

Those who owe tax of less than £30,000 (and more than £32) in January 2021 can use this to spread out that tax bill and repay it by direct debit over up to 12 months – even if that goes beyond the January deadline.

To use this service, you need to have filed your 2019/20 tax return by the January 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 (Monday to Friday, 8am to 4pm).

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

What else counts as a 'reasonable excuse' for filing or paying late? 

A reasonable excuse for not filing or making tax payments on time is usually something unexpected or outside of your control, according to HMRC.

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.
• Postal delays you could not have predicted.
• Delays related to a disability you have.