Self assessment enhanced payment plans revealed

HMRC is allowing more people more flexibility to pay their personal self-assessment tax bills in light of the continuing Covid-19 pandemic.

The taxman has increased the threshold for paying tax liabilities to £30,000 to help ease any potential financial burden people may be experiencing.

Self assessment taxpayers can also apply online for additional support to help spread the cost of their bill into monthly payments, without the need to call HMRC.

The online payment plan service was already being used to set up instalment arrangements for paying tax liabilities up to £10,000 – that has now risen to £30,000.

This increased self-serve Time to Pay limit follows chancellor Rishi Sunak’s September announcement of increased support for businesses and individuals through the uncertain months ahead.

The chancellor announced that self assessment taxpayers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019- 2020 and their first payment on account bill for this current tax year in monthly instalments, up to 12 months.

People who need longer than 12 months to settle their tax liabilities are being advised to contact HMRC in the usual way.

More than 11 million people in the UK complete a self assessment tax return each year.

Once they have completed their return for the 2019-2020 tax year, those who have payments to make may have the option of using the online self-serve Time to Pay facility through GOV.UK.

They can set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.

HMRC estimates around 95 per cent of self assessment customers due to make payments on January 31 next year could qualify for a Time to Pay arrangement using the online self-serve facility, without speaking to one of its advisors.

People looking to set up their own self-serve Time to Pay arrangements must meet the following requirements:

They must have no:

• outstanding tax returns
• other tax debts
• other HMRC payment plans set up

The debt needs to be between £32 and £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Customers using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from February 1, 2021.

The deadline to complete self assessment tax returns for 2019- 2020 is January 31,2021.

If you are completing a tax return for the first time, you will need to register for self assessment.

If your self assessment debts are more than £30,000, or you need longer than 12 months to pay your debt in full, you may still be able to set up a Time to Pay arrangement by calling the helpline on 0300 200 3822.

• To talk about any issues relating to your tax, contact WNJ on 01772 430000