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.
- 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.
- 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
- 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.
- 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;