The government has made some changes to help individuals and business who are struggling to meet the usual tax deadlines.
Income tax – longer to pay
As announce in the Winter Economy Plan back in September, taxpayers have longer to pay for income tax due in January 2021. This applies not just if you deferred the second 2019/20 payment on account (due 31 July 2020) to 31 January 2021 but also to other amounts coming due at the end of January. This would be any balancing payment for the 2019/20 tax year and the first payment on account for 2020/21. The Plan extends the time to pay by up to an additional period of 12 months for those who need it, moving the deadline to January 2022.
Taxpayers with Self Assessment tax debt below £30,000 can take advantage of the extended payment deadline by setting up a payment plan. You can do this online without needing to phone HMRC and should get automatic, immediate approval.
Find out more and set up a payment plan here
For tax debts above £30,000, or to arrange longer to pay, contact HMRC’s helpline to set up a Time to Pay arrangement.
Alternatively, if you are able to, you can pay in full or in instalments on or before 31 January 2021 using the usual online service.
VAT – the VAT deferral New Payment Scheme
The VAT deferral period ended on 30 June 2020. It was originally announced that any VAT payments deferred between 20 March 2020 and 30 June 2020 should be paid in full on or before 31 March 2021. However, the Winter Economy Plan sets out new measures to give businesses extra time to pay. The VAT deferral ‘New Payment Scheme’ allows payment in 11 equal interest-free instalments in the 12 months to 31 March 2022.
You will need to opt-in to do this. We are expecting details from HMRC on how to do this soon. Find out more here
If you prefer, you can still pay in full or make payments towards the deferred VAT at any point before 31 March 2021. HMRC has advice on how to do this here
Further help if you are struggling with your tax bill
HMRC’s Time to Pay service is available to any business struggling to pay tax on time .
You can also find useful information on the TaxAid website. Note: the charity only advises people with an annual income of £20,000 or less.
Please speak to your RfM advisor if your taxable income for 2020/21 has fallen in comparison with 2019/20. It may be possible to reduce your 2020/21 payments on account, rather than use the monthly payment facility.