Personal Tax – deferring payments

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We have received a number of questions from our self-assessment clients about deferring personal tax that may be due and/or making arrangements to pay any liability by instalments.

We have been waiting for clarification from HMRC as to what options are available and we can now confirm these to you.

When the Corona pandemic first started, the government announced various support measures, including the ability to delay any payment on account that was due for payment on the  31st July 31st 2020.   It was not clear until recently if it would also be possible to defer the tax liability that becomes due by 31st January 2021. We can now confirm that any personal tax liability that is outstanding on the 31st January 2021 can be paid by entering into an instalment plan with HMRC. This therefore includes any tax that was due to be paid by 31st July 2020 as well as any liability due on the 31st January 2021.

HMRC guidance is as follows:

Pay in instalments

You can pay your tax by instalments if you’re unable to pay in full by 31 January 2021. If you file your 2019 to 2020 Self Assessment return early we’ll know what payments you owe before the 31 January 2021 payment due date.

You’ll then be able to set up a Time to Pay instalment arrangement with us.

If you owe up to £30,000 you can do this online without having to contact us directly.

When you have filed your return you’ll need to wait at least 48 hours before you can set up your Time to Pay arrangement online.

Late payment penalties are charged when tax remains unpaid 30 days, 6 months and 12 months after its due date for payment. You can avoid them if you enter into a Time to Pay arrangement before they become due and you pay all the tax owing under that arrangement on time.

Interest is payable on Time to Pay instalments. Check guidance on interest rates for late and early payments.

The Time to Pay instalment arrangement link requires you to log-in with a Government Gateway ID so if you don’t already have this you will need to set one up. If you do owe more than £30,000 you will need to contact HMRC by phone to make an arrangement directly with them.


Related article: Delaying payments to HMRC – Using a Time To Pay Arrangement


If you have any questions about the above please contact us.