Help and support for January 2021 self-assessment payments

Back in March, the Government announced that those in self-assessment who were struggling to pay their tax bills due to coronavirus would be permitted to defer the payment on account usually due by 31 July 2020 and opt instead to settle the majority of their 2019-20 tax bill on 31 January 2021. While this will have been a welcome respite for those with cash flow issues at the time, taxpayers who took advantage of this deferral will now be starting to consider how they are going to settle their outstanding tax bills as January approaches.

As part of the Chancellor’s Winter Economy plan, further provisions to help those within self-assessment settle liabilities for the 2019-20 tax year are now available. From 1 October, enhancements to the ‘Time to pay’ scheme will allow many within self-assessment to apply online to spread their remaining 2019-20 bill over a further 12 months from 31 January 2021.

Online application

For taxpayers who meet the following criteria, an application for a ‘Time to Pay’ agreement for their self-assessment bill can be made online, as soon as they have completed their tax return for the 2019-20 tax year, with no requirement to contact HMRC by phone.

To use the online service, taxpayers must meet the following requirements:

  • Their outstanding Self-Assessment tax bill must be between £32 and £30,000
  • All their tax returns should be up to date with no outstanding tax returns
  • They must not have other tax debts outside of self-assessment
  • They must not have other HMRC payment plans set up
  • The tax payment is no more than 60 days overdue. 

This service will allow them to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.

Setting up a 'Time to Pay' arrangement in this manner will not protect the taxpayer from interest charges - interest will be applied to any outstanding balance from 1 February 2021 –but it will help to protect them from late payment penalties.

Application by phone  

A taxpayer who does not meet these requirements – or who will need longer than 12 months to settle their 2019-20 self-assessment tax bill - might still qualify for Time to Pay agreement, but will need to call HMRC to set this up rather that apply online.

Details of how to access support for self-assessment and other taxes can be found on GOV.UK.

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