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Deferring Income Tax payments for Self-employed and Individuals

Deferring Income Tax payments for Self-employed and Individuals

What is it?

HMRC will support self-employed and individuals by deferring Income Tax payments. For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021. No interest or penalties for late payment will be charged if you defer payment until January 2021.

In addition, on 24 September 2020, the Chancellor announced that taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether deferred from July 2020 or due by 31 January under Self-Assessment, could make monthly instalments in a 12 month period.

How does it work?

The maximum of 12 monthly instalments will need to be paid using the Time to Pay scheme and this means the final payment would not be due until January 2022. Further details are available here.

The option of using this self-serve Time to Pay scheme gives taxpayers the facility of setting up a Direct Debit and paying the tax as long as the repayments are between £32 and £30,000.

Individuals using self-serve Time to Pay scheme will be required to pay interest on tax owed from 1 February 2021. 

Who is it for?

Taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether deferred from July 2020 or due by 31 January under Self-Assessment. 

Those that wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:

  • They need to have no:
    • outstanding tax returns – including 2019/20
    • 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

What should I do next?

Those with Self-Assessment payments over £30,000, or need longer than 12 months to pay in full, may still be able to set up a Time to Pay arrangement by contacting the Self-Assessment helpline on 0300 200 3822.

You are still required to file your 2019/20 tax return by 31st January 2021 to avoid a fine. It is a requirement of the Time to Pay scheme that your return is filed on time.

Critchleys Clients: If you have specific questions, please contact your Critchleys Accountant directly.

 


Published 26 March 2020
Last Updated 5 October 2020

5 October 2020

How does it work?

Individuals using self-serve 'Time to Pay' scheme will be required to pay interest on tax owed from 1 February 2021. 

What don't we know yet?

Regarding the Time to Pay scheme:

  • Taxpayers may be required to provide evidence that they are unable to pay on time.

Who is it for?

Those that wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:

  • They need to have 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

What should I do next?

Those with Self-Assessment payments over £30,000, or need longer than 12 months to pay in full, may still be able to set up a Time to Pay arrangement by contacting the Self-Assessment helpline on 0300 200 3822.

24 September 2020

HMRC will support self-employed and individuals by deferring Income Tax payments. For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021. No interest or penalties for late payment will be charged if you defer payment until January 2021.

In addition, on 24 September 2020, the Chancellor announced that taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether deferred from July 2020 or due by 31 January under self-assessment, could make payment in 12 monthly instalments.

The 12 monthly instalments will need to paid using the the Time to Pay scheme. This means the final payment would not be due until January 2022.

Regarding the Time to Pay scheme:

  • No announcement has yet been made about whether these payments will be interest-free, although as this will be under the existing Time to Pay arrangements it is likely that interest will be charged
  • No eligibility criteria have yet been released. Taxpayers may be required to provide evidence that they are unable to pay on time.

Taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether deferred from July 2020 or due by 31 January under self-assessment, but further information is still required. 

27 April 2020
Trusts can also defer payment.

1 April 2020

  1. Who is it for? It applies to all taxpayers who are due to pay a self-assessment payment in July and not just those who are self-employed.

  2. What should I do next? During the deferral period, you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.

    If you’re in temporary financial distress because of COVID-19 more help is available from HMRC’s Time to Pay scheme. You can read our briefing on HMRC’s Time to Pay scheme here.

26 March 2020
First published.

Find out more about Liz Higgins

Liz Higgins

Liz Higgins

Liz is the Head of Private Client Tax at Critchleys LLP.

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