In March, the Government announced that Income Tax Self Assessment payments due on 31 July 2020 could be deferred by up to 6 months until 31 January 2021, with no penalties or interest for late payment charged during this time, to help ease the burden for those financially affected by the impact of coronavirus.
Although this move was initially introduced to help the self-employed, the deferment was then extended to cover all taxpayers with a second Self Assessment payment on account due on 31 July, including those with property rental, investment and dividend income.
HMRC has made the option to defer the second payment on account easy for those who are eligible. Because the offer is automatically applied, you do not need to ask for the deferment, but if you usually make your payments on account by Direct Debit, you will need to cancel this through your bank as soon as you can so that the payment is not automatically collected in July by mistake. Of course, if you do choose to defer, you will still need to submit your Self Assessment tax return to HMRC on time.
The ability to defer this payment will benefit those taxpayers who might not have the funds set aside to make their tax payment on time, due to the impact of coronavirus on their finances. If this is the case for you, deferring payment – and seeking further support through HMRC’s Time to Pay Arrangement – could be a wise decision.
However, in official guidance, the Government does advise that “you can still make the payment by 31 July 2020 as normal if you’re able to do so.”
This is because, if you choose to defer your second payment on account until the 31 January 2021 deadline, you will need to budget accordingly so you can also afford to pay for the following on 31 January:
- Any balancing payment due for the 2019-2020 tax year
- Your first payment on account due for the 2020-2021 tax year.
With this in mind, our recommendation echoes the official guidance: if you can pay on time, you should pay on time. There are other forms of financial support available if you need it, depending on what your circumstances and eligibility, including making a claim under the Self-Employment Income Support Scheme, or applying for Government-backed loan, grant, or a mortgage payment holiday. Plus, HMRC’s helpline for additional support for is open Monday to Friday 8am to 4pm on 0800 024 122.
TBL Accountants is here to keep you informed of all updates during this time so you can be aware of all the measures available to help you and your business. If you have any questions or enquiries, please get in touch with our expert team here or call us on 01702 466 886.