Self Assessment taxpayers, hit hard by the lockdown and loss of trade, have taken the opportunity to spread their tax payments with monthly instalments since April 2021.
Around 100,000 taxpayers have been in contact with HM Revenue & Customs (HMRC) to set up a Self Assessment payment plan.
HMRC has extended the deadline for filing tax returns, paying any tax owed or setting up a payment from 31 January this year to 28 February, to allow pandemic hit taxpayers extra time to pay.
Since April 2021, they have been able to use the online Time to Pay service to pay more than £310 million worth of tax in instalments. These are spread over 12 months on debts of up to £30,000 that they cannot pay in full.
Setting up the Self Assessment repayment arrangement can be done online at GOV.UK without speaking to HMRC. If a taxpayer owes more than £30,000, or needs longer to pay, they should contact HMRC to discuss payment options.
This can be done without incurring penalties, but from 1 February, all outstanding amounts were subject to interest of 2.75 per cent.
This means:
- Anyone who did not file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February
- Anyone who did not pay their tax liabilities by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April
HMRC has warned that a late payment penalty will be charged if tax remains outstanding and a payment plan has not been set up, by midnight on 1 April 2022.
Further late payment penalties will be charged at the six and 12-month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We understand some customers might be worried about paying their Self Assessment bill this year, and we want to support them. To see if you’re eligible to set up a payment plan, go to GOV.UK and search ‘pay my Self Assessment’.”
For help and advice on taxation matters, please get in touch with our team today.