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Coronavirus Advice  •  HMRC  •  Personal tax

New details of enhanced Time to Pay for self-assessment tax

By RJP LLP on 7 October 2020

In his Winter Economy Plan, Rishi Sunak announced some new, enhanced payment arrangements for people who are paying income and capital gains tax via self-assessment.

HMRC estimates around 95% of self-assessment customers who are due to make payments on 31 January 2021 could qualify to implement a Time to Pay arrangement using the self-serve Time to Pay facility online, without needing to speak to an HMRC adviser. These terms apply to taxpayers who have an outstanding liability on that date of up to £30,000.

Who could use the enhanced Time to Pay facility?

The enhanced payment arrangements are for taxpayers who are unable to pay their self-assessment bill which is due on 31 January 2021 and can include the following up to a ceiling of £30,000:

  • The second payment on account for 2019/20 which was originally due on 31 July 2020 but may have been deferred;
  • The balancing payment for 2019/20 which is due on 31 January 2021; and
  • The first payment on account for 2020/21 which is due on 31 January 2021.

It will be possible to make a time to pay arrangement online and pay the tax due in monthly instalments over a period of up to 12 months. To be eligible for this, taxpayers must meet the following requirements:

  • They must 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);
  • They must have no other tax debts or have set up any other HMRC payment plans;
  • They must have a tax debt of between £32 and £30,000;
  • A payment plan must be established no later than 60 days after the due date of the debt of 31 January 2021, i.e. by 1 April 2021 at the latest.
  • However note that to avoid late payment penalties, the payment plan must be set up by the trigger date for late payment penalties which are 30 days after the due date i.e. by 2 March 2021.

Interest will be applied to any outstanding balance from 1 February 2021. This contrasts with the deferral of the second payment on account which was due on 31 July 2020 and on which no late payment interest has been charged.

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.

There is currently no facility for accountants to apply for Time to Pay online on behalf of their clients, therefore it is necessary for taxpayers to have established their own Government Gateway account.

If you would like to understand more about Time to Pay and what to expect, read our earlier article: Time to Pay article

partners@rjp.co.uk

 

 

 

 

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31 January 2021 - Submit your self assessment tax return and pay tax due

Don’t forget the deadline for sending in your self assessment tax return and making tax payments. You may be able to agree a Time to Pay schedule with HMRC depending on your circumstances and pay in instalments. Talk to us and we can help you prepare your tax return and advise you on the best options for deferred payments.