As part of the Chancellor’s winter economy plan, self-assessment taxpayers will be able to defer taxes due in January 2021 by up to 12 months.
A deferral had already been provided for the second payment on account due on 31 July 2020 for the 2019/20 tax year to 31 January 2021. The Government has now further announced that it will be possible to agree a time to pay arrangement over the 12 months following 31 January 2021 for tax liabilities of between £32 and £30,000.
This second deferral may now, therefore, comprise the following tax payments:
- second payment on account for 2019/20;
- balancing payment for 2019/20; and
- first payment on account for 2020/21.
The enhanced arrangement will enable you to spread your tax payments over 12 (or less) monthly instalments rather than an outright deferral to 31 January 2022. HMRC have set up an online facility to request this arrangement which can be found here. Please note that you will need a Government Gateway account set up in order to access this service.
In order to be eligible to apply for the enhanced time to pay arrangement, you must have filed your 2019/20 tax return and have no other outstanding tax returns or tax debts. The arrangement needs to be set up no later than 60 days from the due date (i.e. by 1 April 2021). Interest will be charged on the deferred liability commencing from 1 February 2021, although late payment penalties will not be levied.
If you cannot use the online service, owe more than £30,000, or, if you require longer than 12 months to repay your debt, then the online facility will not be available. You can, however, call the self-assessment payment helpline on 0300 200 3822 to discuss an alternative time to pay arrangement.