HM Revenue & Customs have just started contacting Self Assessment tax payers following the Chancellor’s announcement recently about how they can now (from 1st October 2020) apply online to automatically spread the cost of their Self Assessment tax bill into monthly payments without the need to call them to agree it.
The online self-serve ‘Time to Pay’ service limit has been increased from £10,000 to £30,000, to help ease any potential financial burden being experienced due to the coronavirus pandemic.
You need to have completed your tax return for the 2019/20 tax year. At that point you can then log in to your Gateway account at GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.
To qualify, you must meet the following requirements:
- There must be no:
- outstanding tax returns
- other tax debts
- other HMRC payment plans set up
- the debt needs to be between £32 and £30,000
- the payment plan needs to be set up no later than 60 days after the due date of a debt (i.e. by 1 April 2021)
It is not clear whether those individuals who have deferred VAT liabilities will qualify as this could constitute a tax debt and anyone who may need longer than 12 months to settle their tax liabilities are invited to contact HMRC in the usual way.
Clearly this represents a potential cash flow advantage for people in these challenging times, but there is a requirement to pay interest on the tax owed. Interest will be applied to any outstanding balance from 1 February 2021 and will be charged at 2.6% (assuming the rate doesn’t change).
If you need any help with your Self Assessment or other tax matters please do not hesitate to get in touch with the tax team on email@example.com or call 01242 776000.