31 January 2021 is the deadline for paying:
- Your second payment on account for 2019/20 if deferred from 31 July 2020, plus
- Your balancing payment due for 2019/20, plus
- Your first payment on account for 2020/21
If these add up to less than £30,000, then instead of making this payment in full by 31 January, taxpayers can set up a time-to-pay arrangement, making regular payments by direct debit over up to twelve months – and here’s the best bit – without having to talk to or contact HMRC directly.
Can I defer my 31 January tax bill?
You can apply for the time-to-pay arrangement if you meet the following conditions:
- You owe less than £30,000
- You have no outstanding returns, debts or existing payment plans with HMRC
- You agree to make payments by direct debit
- You set up the payment plan by 31 March 2021
How do I apply?
HMRC have set up an online tool which can be accessed at this link: https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments.
You will need a Government Gateway ID but if you don’t already have one you can set this up as part of the application process.
You will need to wait 48 hours from submitting your 2019/20 Return before you can apply.
Will I have to pay interest or penalties?
Interest will be charged from 1 February 2021. The current interest rates are 2.6% per annum.
Late payment penalties should be avoided once the payment plan is in place, as long as you stick to it.
The first late payment penalty is applied at the end of February and is charged at 5% of the balancing payment amount. Although the deadline for setting up the payment plan is 31 March, you may like to make sure it is in place by the end of February to avoid this surcharge.
Further information
Please be aware that although payments of tax can be deferred, there are at the time of writing no plans to extend the return filing deadline of 31 January 2021; late returns will be subject to a £100 penalty even if no tax is due.
If you have any questions or would like any help completing your Tax Return please contact me.
