Income Tax
As part of the government’s support package for Covid-19 pandemic, Self Assessment payments on account that were due 31 July 2020 could be deferred to January 2021.
In the Winter Economy Plan it was announced that taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021 could make payment in 12 monthly instalments under the time to pay arrangements. This means the final payment would not be due until January 2022.
You can set up a payment plan to spread the cost of your latest Self Assessment bill if:
- you owe £30,000 or less
- you do not have any other payment plans or debts with HMRC
- your tax returns are up to date
- it’s less than 60 days after the payment deadline
You can avoid late payment penalties if you enter into a Time to Pay arrangement before they become due and you pay all the tax owing under that arrangement on time. Interest is still payable on Time to Pay instalments.
Further information can be found here: https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19
Claims to reduce payments on account
Going forward it is likely that many businesses will also see a drop in profitability in the 2020/21 tax year. The first Income Tax payment on account for 2020/21 will be due on 31 January 2021. Businesses should monitor their position as we reach the end of 2020 and contact us to make an appropriate claim if necessary
VAT
On 24 September 2020, the Chancellor also announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period.
Instead of paying the full amount by the end of March 2021, you can make smaller payments up to the end of March 2022, interest free.
You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022. The online opt in process will be available in early 2021. You must opt in yourself though, we cannot do this on your behalf.
To use this scheme you must:
- still have deferred VAT to pay
- be up to date with your VAT returns
- opt in before the end of March 2021
- pay the first instalment before the end of March 2021
- be able to pay the deferred VAT by Direct Debit
Get ready now if you want to opt-in to the new payment scheme. Before opting in you must:
- create your own Government Gateway account if you don’t already have one
- submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
- correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
Further information can be found here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
Here to Help
It is important to consider how these changes affect you and seek advice at the earliest opportunity. To find out how we can assist, please get in touch
