One of the announcements by HMRC at the start of the coronavirus pandemic was the introduction of emergency measures to help those affected by COVID-19 using the existing Time to Pay service. Many businesses and self-employed people with outstanding tax liabilities were eligible to receive support with their tax affairs through this service.
Since April 2021, Self-Assessment taxpayers have used the online Time to Pay service to pay more than £310 million worth of tax in instalments. The option to spread your tax bill remains available for the 2020-21 tax year.
Making a time to pay arrangement
Once you have filed your Self-Assessment return for 2020-21 there is an option to set up an online Time to Pay arrangement to spread the cost of any tax due on 31 January 2022 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt. This should be done sooner rather than later as a 5% late payment penalty will be charged if the tax remains outstanding and a payment plan has not been set up before 1 April 2022.
If you owe Self-Assessment tax payments of over £30,000 or need longer than 12 months to pay in full, you can still apply to set up a Time to Pay arrangement with HMRC, but this cannot be done using the online service.
HMRC has already announced that due to the coronavirus pandemic, fines for taxpayers that file their Self-Assessment returns late will be waived until 28 February 2022. However, interest will be applied to any outstanding balance from 1 February 2022 so you should try and pay your tax bill or enter a suitable payment arrangement as soon as possible.
Source: Informanagement
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