So…. January and February have come and gone, as has the deadlines for filing 2019/2020 tax returns.

As you will be aware HMRC had extended the deadline for the filing of tax returns for the year ended 5 April 2020 to 28 February 2021 but now that this date has passed, late filing penalties of £100 will be charged.

In addition, you will also be aware that they have facilities for you to arrange time to pay agreements, which allow you to spread the payment of your January 2021 tax liability over a maximum of 12 months, provided certain conditions are met. HMRC will still charge interest on this late payment, but have announced that they will not charge the initial late payment surcharge of 5%, which is usually charged on any tax unpaid as at 1 March. This is so long as the tax is paid or a time to pay arrangement is agreed with HMRC by 1 April 2021.

However, there is something which does need to be considered and that is the late payment of Class 2 NIC’s that may be included in the January 2021 payment.

The January 2021 payment could be made up of three liabilities, the deferred July 2020 payment, the balancing payment for 2019/2020, which may include Class 2 NIC and the first payment on account for 2020/2021.

If any payment towards a liability is made HMRC will automatically allocate it against the July 2020 tax which means that any Class 2 NIC will remain as unpaid as at 31 January 2021. If not paid by this date, this could affect claims for contributory benefits, so HMRC are recommending that you contact them as soon as possible to get any payment allocated against the outstanding Class 2 National Insurance Contributions