Self-employed can defer July tax payment
As a coronavirus emergency measure, the government announced that taxes due in July 2020 can be deferred to January 2021 for self-employed Brits who are facing financial difficulty due to the pandemic.
Each payment on account is estimated, based on 50% of the previous year’s self-assessment tax bill and they are advance payments towards the current year’s tax bill.
HMRC said an £11bn cash flow boost is available to self-assessment customers by deferring the second payment on account usually due at the end of July.
This is on top of the £7.8bn paid to the 2.7 million self-employed workers via the government’s Self-employment Income Support Scheme (SEISS).
HMRC said the payment on account deferral “will give immediate support to businesses and individuals by keeping cash at their disposal during this extraordinary time of uncertainty”.
It added that taxpayers won’t need to contact HMRC to defer the payment. They automatically opt-in to the deferral by not paying the tax bill by 31 July. HMRC will update its systems to ensure no interest or penalties are applied, providing the tax bill is paid in full by 31 January 2021.
The only action taxpayers may need to take is to cancel their direct debit if one has been set up for the payment on account.
Angela MacDonald, HMRC’s director general of customer services, said: “We want to support taxpayers as much as possible as they face uncertainty and difficult circumstances.
“That’s why we want to remind those who may struggle to pay a tax bill right now that they have the option to defer their Self-assessment payment. They don’t need to do anything to take advantage of this deferral.”
However, HMRC warns that taxpayers should think carefully about whether deferral is right for them. This is because the deferred amount will be due on 31 January 2021, the same date that any 2019/20 balancing payment and first 2020/21 payment on account will be due. As such, all three separate payments may be due all at once.
Taxpayers can contact HMRC to discuss paying these combined amounts in instalments if they have difficulty in paying them all in full at once.