The move is designed to help taxpayers cope with the Coronavirus pandemic pressures.

Only 6.5m of the 12.2m taxpayers who need to submit their tax return by 31 January have already done so.

The penalty waiver gives taxpayers an extra month to complete their 2020/21 tax return and pay any tax due without being penalised.

The waiver was also applied last year.

Normally, late filing penalties are applied to all returns due on, but filed after, the 31 January deadline. Those penalties are cancelled if the taxpayer has a reasonable excuse for filing late.

This year the deadline will remain at 31 January. However, the waiver means that anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February.

Anyone who cannot pay their Self-Assessment tax by the 31 January deadline, will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.

Interest will be payable from 1 February.

HMRC said it recognises the pressure faced this year by Self Assessment taxpayers and their agents and that the pandemic has affected the capacity of some agents and taxpayers to meet their obligations in time for the 31 January deadline.

Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March. This year, like last year, HMRC is giving taxpayers more time to pay or set up a payment plan.

Self-Assessment taxpayers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April.

Lucy Frazer, Financial Secretary to the Treasury, said: “We recognise that Omicron is putting people under pressure, so we are giving millions of people more breathing space to manage their tax affairs.

“Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.”

The 2020/21 tax return covers earnings and payments during the pandemic.

Taxpayers need to declare if they received any grants or payments from the Covid-19 support schemes up to 5 April 2021 on their Self Assessment, as these are taxable.

New Years Eve was a busy day for tax returns, with 33,467 returns filed.