[20.11.20]
As part of the Government’s response to COVID-19 the Chancellor announced earlier in the year that the Self-Assessment Payment on Account due on or before 31st July 2020, could be deferred to 31st January 2021. In October the Chancellor announced that those individuals who are unable to make the July Payment on Account before 31st January 2021, can instead make that payment in instalments from 31st January 2021.
We would like to emphasise to clients that should the July 2020 payment be made before 31st January 2021, there will be no interest or penalty.
If you are unable to make that payment before 31st January, you will have to set up a Time to Pay arrangement with HMRC. If you owe up to £30,000 you can do this online without having to contact HMRC directly. You can only set up the arrangement 48 hours after your 2019/2020 Self-Assessment return has been filed. Please note that interest is payable on Time to Pay instalments, which is currently 2.6%. If you already have a Time to Pay arrangement in place for other overdue tax, you will need to contact HMRC to amend that arrangement to include the deferred July 2020 Payment on Account.
If you do not set up the Time to Pay arrangement, normal penalties will be incurred for all unpaid tax at 30 days, six months and 12 months after its due date for payment.
Payments on Account are based on your previous year’s tax bill. If your financial situation has been impacted by COVID-19, you may have a reduced tax liability arising for the 2020 to 2021 tax year. You may want to apply to HMRC to reduce your 2020 to 2021 Payments on Account.
If you have any queries please contact Jackie or Andrew on 01625 524127.
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