Originally, you could only use the Time to Pay instalments scheme if you had a tax bill of no more than £10,000. HMRC have just raised this to £30,000, as of 1st October 2020. Does this help you?
What is the Time to Pay initiative?
HMRC’s Time to Pay (TTP) scheme is basically a way to pay off your tax bill in instalments, instead of one or two larger lump sums. Most businesses can arrange this online, though their Government Gateway Account. It means that you have an agreement with HMRC to pay your tax bill in 12 monthly instalments, rather than on the usual July and January dates.
Why have the government raised the threshold?
In their Press Release, HMRC said: ”From 1 October 2020, HMRC has increased the threshold to £30,000 for Self Assessment customers, to help ease any potential financial burden they may be experiencing due to the coronavirus pandemic.”
It gives businesses a little financial respite. For many there will be a huge discrepancy between their earnings of 2019-20, before COVID-19 hit, and their current trade. You owe tax on a year of normal income. You budgeted for this, as usual. And then had to deal with the impact of Coronavirus. You probably had to use at least some of that tax pot to keep yourself afloat. Combined with a vastly reduced capacity to make money since March and a deferred tax bill is quite useful to many struggling businesses.
Jesse Norman, Financial Secretary to the Treasury, said:
“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.”
Who is eligible for Time To Pay?
You can only apply to set up TTP, if you’ve already submitted your self assessment tax return. In order to use the online service you need to owe between £32 and £30,000. And your payment plan needs to be sorted out within 60 days of the payment deadline.
There are some other eligibility criteria to meet:
- You have no other payment plans with HMRC
- All of your tax returns are filed as they should be with none outstanding
- You are not already in debt to HMRC
According to HMRC, 95% of those in self assessment will qualify to start a TTP plan for the 2019-20 tax year.
What if I can’t use the online service?
If you’ve missed your payment date or can’t use HMRC’s online service, you can call them about your self assessment situation on 0300 200 3822. This dedicated helpline is open on week days between 8am and 4pm.
When are my 2019-20 self assessment payments due if I use TTP?
The deadline for paying your 2019-20 self assessment tax bill was 31st January 2021. This deadline has now been extended by one year, to 31st January 2022. If you deferred your July payment on account to the January, the new deadline also applies to this amount.
Be aware that the deadline for submitting your 2019-20 self assessment tax return is still 11.59pm on 31st January 2021.
Built in flexibility
HMRC really want everyone to be able to pay their taxes. They’ve built some flexibility into this system. Basically, if you meet all the criteria above, the process is simple and you complete your TTP plan set up online. But you are not completely excluded if you’re in a different position, it’s just more complicated.
For example, if you have other taxes that you’re struggling to pay because of COVD-19, you still might be able to arrange instalment payments.
VAT – The lump sum bill had been due at the end of March next year but instead there will now be the option to pay in 11 smaller interest-free payments through the next financial year which runs from April 2021 to April 2022.
You need to contact Payment Support Services on 0300 200 3835, between 8am and 4pm, Monday to Friday. If you’ve already received a payment demand from HMRC, you should get in touch with the department that sent you the letter instead.
