Self-employed deferred tax: What you need to know for January
Written by India Johnson
Earlier this year, the Government introduced an optional tax deferral scheme that let self-employed people choose to delay their July payment on account until January 2021.
The scheme didn’t need to be applied for – HMRC updated their system automatically to mean there’d be no penalties or interest applied to those missing the July 31st deadline.
All of this still stands, but the Government has also announced some additional support for those worried about making their tax payments come January.
What this all means for your January tax payments
If you deferred your July 2020 payment on account, the government states that you still need to pay it by 31st January 2021. If you’re able to make the payment by then, you don’t need to take any further action. If you think you’re going to be unable to make your tax payment by 31st January though, this is when you’ll need to take action.
What to do if you can’t make your January tax payments
Even before Covid 19, the Government had a payment plan service in place to help those struggling to pay their tax bill. It’s called Time to Pay, and traditionally involved contacting HMRC to try to work out a payment plan for any amount owed up to £10,000.
The Government has recently announced, though, that the Time to Pay scheme will now cover amounts owed up to £30,000.
It’s also different in that it’s being operated on a self-serve basis, so you can simply apply online without having to contact HRMC directly.
This is to help make things easier – so those who are struggling with their tax payments because of the financial impact of Covid on their business can make other arrangements fairly quickly and efficiently. The good news is that HMRC has estimated around 95% of Self Assessment filers could qualify for Time to Pay self-serve – without needing to speak to an advisor.
It’s important to note that you’ll need to apply for Time to Pay no later than 60 days after your tax bill due date.
Head to the Government site to find our more and apply >
Applying for additional self-employed support
The Government has recently announced the extension of it’s Self-Employed Income Support Scheme (SEISS), which has now been rolled out into a third phase. So you could be eligible to get one or two grants over the coming months.
Head to our article on SEISS Phase 3 >
You should file your Self Assessment as soon as possible (you can still pay later)
If you think you may need to use the Government’s Time to Pay plan, it’s still a good idea to file your 2019/20 Self Assessment as soon as possible. Doing so has tons of benefits (head to our article on the topic to read up on them), and doesn’t mean you have to actually pay early.
Keep an eye on our social channels and blog for more updates about the support that’s available for the self-employed.
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