As part of the government support package to deal with the COVID-19 pandemic, Income Tax payments on account due in July 2020 under the Self Assessment system may be deferred to January 2021.
At a glance
Payments on account of Income Tax due under Self Assessment are due on 31 January, during the tax year, and 31 July following the end of the tax year.
The second payment on account for the 2019/20 tax year is due by 31 July 2020.
HMRC have announced that:
- The July 2020 payment may be deferred until 31 January 2021.
- This is an automatic offer with no applications required.
- No penalties or interest for late payment will be charged in the deferral period.
Originally badged as applying to the self-employed only, the government has since amended their guidance and it now includes all taxpayers due to make Self Assessment payments on 31 July 2020 including landlords.
Anyone who wished to make their payment by 31 July 2020 could do so.
On 24 September 2020 as part of the Winter Economy plan it was announced that taxpayers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether deferred from July 2020 or otherwise due by 31 January under self-assessment, could make payment in 12 monthly instalments under the time to pay arrangements. This means the final payment would not be due until January 2022.
- Taxpayers using self-serve time to pay will be required to pay interest on tax owed from 1 February 2021.
Claims to reduce payments on account
- We note also that businesses who know that their 2019/20 profits are going to be less than the previous year can still make claims to reduce their payments on account.
- Going forward it is likely that many businesses will also see a drop in profitability in the 2020/21 tax year. The first Income Tax payment on account for 2020/21 will be due on 31 January 2021, businesses should monitor their position as we reach the end of 2021 and make an appropriate claim if necessary.
This tracker covers measures announced by the government to support individuals and businesses, as we get through COVID-19.
Guidance in respect of setting up time to pay agreements.
Our free summary examines how late payments are charged and how to appeal.