The tax deadline has just passed, and if you haven’t paid your taxes already due to losing income in the past year because of covid, there are things that you can do. If you are paying self-assessment tax, you have until the 2nd or March to arrange a payment plan and avoid any penalties.
What are the normal rules?
Normally, HMRC charges interest on late bills, which can impact you financially. However, because of the financial losses that many people have faced this year, there are some other procedures that have been put into place.
What has changed this year?
Normally, people can apply to pay their Self Assessment tax if they owe less than £30,000. This year, the same procedure is in place – but more people can apply for it, and it will also include any delayed payments on account.
What are the conditions?
You should not have any other debts or payment plans active with HMRC, you should have up to date tax returns, and it should be before the 2nd March, which is 60 days after the deadline.
How does it work?
You can set up a payment plan by logging into your Government Gateway account. You will be reminded that you owe tax, and from there you can follow the prompts to set up a payment plan.
The service asks you how much you think you can pay per month, and then works out a feasible plan over a certain amount of months. For example, if you owe £4,000, and can pay £1,000 per month, you will be paying this amount each month (plus interest) each month from now until May.
HMRC charges 2% interest on payment plans. It is always cheaper to pay it off at once, but this is a feasible alternative if you know that you can pay it off in the time allowed.
Could HMRC cancel the plan?
HMRC may cancel the plan if you do not make a payment without telling them. If you cannot make a payment for any reason, get in touch with them and explain your predicament. They are currently being fairly flexible.
If you need any advice regarding your taxes contact CWR Accountants.