HM Revenue & Customs (HMRC) has widened the scope of its online Time to Pay service, by upping the amount that a taxpayer can have in outstanding liabilities from £10,000 to £30,000.

The move means that more taxpayers will be able to spread the cost of their tax bills by paying in monthly instalments, without needing to call HMRC to make arrangements.

The Chancellor confirmed, in his Winter Economy Plan, that taxpayers could arrange a payment plan of up to 12 monthly instalments to cover liabilities deferred from July 2020.

HMRC now says that this adjustment also covers outstanding tax owed for 2019-20 and the first payment on account for the current 2020/21 tax year.

Taxpayers must set up a Time to Pay arrangement no later than 60 days after the due date of the debt to qualify for the payment plan. For payments due on 31 January 2021, the 60-day window ends on 1 April 2021.

However, it’s worth bearing in mind that setting up a payment plan more than 30 days after the due date of the tax debt will lead to late payment penalties.

This means payment plans in respect of tax due on 31 January 2021 would, ideally, need to be in place by 2 March 2021.

Unlike the previous Self-Assessment deferral of the second payment on account that was due on 31 July 2020, the new payment plans will be subject to interest from 1 February 2021.

To qualify for a payment plan using the online self-service Time-to-Pay system, taxpayers must:

  • Have no outstanding tax returns;
  • Have no other tax debts;
  • Have no other HMRC payment plans set up; and
  • Have a debt of between £32 and £30,000.

HMRC has also warned taxpayers against scammers claiming to be from HMRC and offering to set up payment plans. Currently, payment plans can only be set up by individual taxpayers.

In order to use the online self-serve Time to Pay facility on GOV.UK taxpayers should have completed and filed their 2019-20 Self-Assessment tax return, and hence know how much they owe HMRC.

Those with Self-Assessment debts of more than £30,000 or who need more than 12 months to pay the tax they owe may be able to set up a Time to Pay arrangement via the Self-Assessment Payment Helpline on 0300 200 3822.

Important update (27/01/2021): Whilst the deadline for filing Self-Assessment Tax Returns is still 31 January 2021 and HMRC are encouraging those who can meet the deadline to do so, it has also confirmed that anyone who cannot file by 31 January will not receive a late filing penalty if they file online by 28 February 2021.

How can George Hay help?

As always, if you’re concerned about settling your tax liabilities, speaking to your adviser is a good place to start. We can point you in the right direction when it comes to making the necessary arrangements and ensure that the appropriate pre-administration has been completed.

Filing your self-assessment tax return in a timely manner has always been important. However, after 12 months of struggle and uncertainty, it has taken on a renewed importance this year, as it could give you the financial breathing space that you need.

When contacting your bank, stakeholders or HMRC for support, knowing your financial circumstances will stand you in good stead to negotiate payment plans or to claim entitlements.

Contact us today, to discuss your circumstances with one of our professional tax advisers.

Link: If you cannot pay your tax bill on time

Share to