Self Assessment Time To Pay

It’s that time of year again as we start the process of preparing self-assessment tax returns for our clients. This year however things are a little different, due to changes to the Self Assessment Time To Pay service.

Al self-assessment tax returns must be submitted and the 31st of January, however, it is best not to wait until the deadline because not only does the tax return need to be filed you also need to arrange payment for any personal tax due by the payment deadline.

time to pay

Time To Pay Online Service

Self Assessment taxpayers can apply online for additional support to help spread the cost of their tax bill into monthly payments under the Time To Pay service (live from the 1st of October 2020) without the need to call HM Revenue and Customs (HMRC).

Changes To The Time To Pay Threshold

Ordinarily, the online payment plan service can be used to set up payment instalments for tax liabilities up to £10,000. However, from the 1st of October 2020, HMRC increased the threshold to £30,000 for Self Assessment customers. This has been done to help ease any financial difficulties which taxpayers are experiencing due to the coronavirus pandemic.

The announcement of the increased self-serve Time to Pay limit of £30,000 followed the Chancellor of the Exchequer’s announcement to increase support for businesses and individuals on the 24th September.

What Does It Mean?

Self Assessment customers can pay their:

  • deferred payment on account bill from July 2020
  • any outstanding tax owed for 2019 to 2020
  • their first payment on account bill for this current tax year

in monthly instalments, up to a period of 12 months, via this self-serve tool.

Customers who need longer than 12 months to settle their tax liabilities are invited to contact HMRC in the usual way.

“We are supporting jobs by giving more breathing space to up to 11 million Self Assessment taxpayers when managing their tax affairs.

Enhancing Time to Pay should ease the financial burdens and protect the livelihoods of these taxpayers, as they navigate the months ahead.”

Financial Secretary to the Treasury, Jesse Norman.

This change will affect the 11 million customers who complete a Self Assessment tax return every year.

time to pay

How Does It Work?

Once a tax return for the 2019 to 2020 tax year has been completed, those who have payments to make may have the option to use 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 that around 95% of Self Assessment customers due to make payments on the 31st of January 2021 could qualify for a Time to Pay arrangement using the self-serve Time to Pay facility online; without needing to speak to an HMRC adviser.

Self Assessment customers can set up their own Time To Pay online payment plan here.

Who Can Use Time To Pay?

HMRC advise that any customers who wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:

  • there must be no:
    • outstanding tax returns
    • other tax debts
    • other HMRC payment plans set up
  • the debt must be between £32 and £30,000
  • the payment plan must be set up no later than 60 days after the due date of a debt

Customers using the self-serve Time to Pay service will be charged interest on the tax owed which will be applied to any outstanding balance from the 1st of February 2021.

Find Out More

The deadline to complete Self Assessment tax returns for 2019 to 2020 is 31 January 2021. You then have 60 days after the due date to set up a payment plan. More information about Time to Pay arrangements can be found at GOV.UK here.

If the amount of tax which you owe is over £30,000, or you think you’ll need longer than 12 months to pay, you may still be able to set up a Time to Pay arrangement by calling the Self Assessment Payment Helpline on 0300 200 3822.

Beware of scams calls or emails claiming to be from HMRC. 

These scams are offering to help you set up payment plans to pay any tax owed, however they are not from HMRC.

More information on how to recognise genuine HMRC contact can be found at GOV.UK.

If you need any more help with preparing your self-assessment information please get in touch by calling 01704 211 434 or