Self Assessment – Time to Pay Arrangements

Self Assessment Time to Pay Arrangements
Photo credit: rawpixel.com

Under government announcements, a taxpayer had the option to defer their second payment on account for 2019/20 if they were:

  • registered in the UK for self assessment and;
  • finding it difficult to make that payment by 31 July 2020 due to the impact of coronavirus.

The deferred 31 July 2020 payment on account can be paid in full any time up to 31 January 2021. No interest charges or late payment penalties will be charged as long as the deferred tax is paid in full by 31 January 2021.

If a taxpayer is unable to pay their self assessment liabilities in full by 31 January 2021 (including the deferred 31 July 2020 tax payment), they can enter into a Time to Pay Arrangement with HMRC in order to pay by instalments. Such an arrangement will need to be agreed before the tax becomes due. It is therefore advisable to file the 2019/20 tax return at an early date, so that the amount of tax due is determined before the 31 January 2021 due date.

A Time to Pay Arrangement can be set up online for tax liabilities owing of up to £30,000.

Late payment penalties are charged when tax remains unpaid 30 days, 6 months and 12 months after its due date for payment. These penalties can be avoided where a Time to Pay Arrangement has been entered into before the tax becomes due and all of the tax owing is paid under that arrangement on time.

Interest is payable on Time to Pay instalments.

HMRC provide further information at https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19

If you have any queries regarding the above, please get in touch with your usual Ward Williams contact.