Deferring your Personal Tax payments…

News, Personal Tax,

As part of the Winter Economy Plan, the Chancellor announced that payments of Income tax can be made in instalments.

This includes the Payment on Account that may have been due on the 31st July 2020 that was allowed to be deferred until the 31st January 2021, as well as any payments that may be due on the 31st January 2021.

The criteria are as follows:

  • You must owe less than £30,000. (There is a lower limit of £32, but we have no idea how this was calculated!)
  • You must not have any other debts or payment plans with HMRC.
  • If you default on any of the payments, HMRC can ask you to immediately pay all that you owe.
  • You must have submitted your 2019/20 Tax Return.
  • Any tax must have been due within the last 60 days.

As many of you have already experienced, contacting HMRC at the moment is challenging, to say the least!

You can apply online to make a payment plan for your personal tax.

To set up a payment plan online, you will need to follow this link. You will need your Gateway information to be able to log in, and have your Unique Taxpayer reference (UTR) together with details of your liability and due dates. You can find out what other information you’ll be asked for here.

However, this could cause you serious problems later…

We have heard that setting up a payment plan online does NOT stop HMRC sending Debt Collection letters. This appears to be because two parts of the HMRC system are not linked effectively!

Our recommendation would be to make the time to call HMRC and agree the payment arrangement over the phone. These arrangements are fed into the correct part of the system and stop any chaser letters and debt collection activities.

We appreciate that it’s a pain to do, as many calls are taking so long to get through, but the benefit is huge later!

Self Assessment Payment Helpline: 0300 200 3822, open Monday to Friday 8am to 4pm

And finally…

  • Do include the details of the amounts you are due to pay and when in your Budget and cashflow. With so many changes to regular payments, it would be easy to lose sight of when they fall due.
  • Remember that you will need to pay interest on any amounts outstanding after 1st February 2021.
  • Remember too that there is no guarantee that HMRC will allow future payments to be made in instalments, so at some point you may well have to find the cash for instalments as well as a looming six monthly payment. Careful cash control is going to be really important!

Do get in touch if you’d like to discuss your Personal Tax situation, or your cash control process. We’d be very happy to help. Alternatively, you might like to look at our Rebound Resources for more ideas.