Following the announcement of the ability to defer tax payments in July 2020, the Government has announced enhanced payment arrangements for those paying income and capital gains tax via self-assessment.

HMRC has increased the upper threshold for online applications for time-to-pay to £30,000.

 

  1. What Has Changed?
  • The Chancellor has announced enhanced payment arrangements for taxpayers unable to pay their self-assessment bill that falls due on 31 January 2021.
  • The enhanced payment arrangements applies to all tax due on that date including:
  • Deferred second payment on account for 2019/20 which was originally due on 31 July 2020;
  • Balancing payment for 2019/20 due on 31 January 2021;
  • First payment on account for 2020/21 due on 31 January 2021;
  • The amounts due can be paid in monthly instalments over a period of up to 12 months.

 

  1. Am I Eligible?
  • Taxpayers can set up a time to pay arrangement online if you meet the following requirements:
  • You have no outstanding tax returns (the 2019/20 tax return must have been filed and it must also have been processed by HMRC which can take 72 hours for a return filed online).
  • There must be no other tax debts, or HMRC payment plans set up.
  • The debt must be between £32 and £30,000;
  • Taxpayers who owe more than £30,000 or need longer than 12 months to pay may still be able to set up a time to pay arrangement by calling the self-assessment payment helpline on 0300 200 3822

 

  1. When Do I Have To Set Up The Plan?
  • The payment plan must be set up no later than 60 days after the due date of a debt e. by 1 April 2021.
  • However, to avoid late payment penalties the payment plan must be set up by the trigger date for late payment penalties which is 30 days after the due date i.e. by 2 March 2021.

 

  1. Will I Have To Pay Interest?
  • Interest will be applied to any outstanding balance from 1 February 2021;
  • This contrasts with the deferral of the second payment on account due in July 2020 on which no interest was charged;
  • No – so long as you are eligible for the Scheme;

Barrons has put together a helpful guide to running your business during the coronavirus crisis.