Thousands set up payment plan to spread the cost of tax bills
Taxpayers are able to use instalment arrangements to pay their self-assessment tax bills to spread the cost of up to £30,000.
In October, HMRC increased the threshold as part of the ‘Time to Pay’ arrangements from £10,000 to £30,000 and since then, almost 25,000 people have set up the plans.
The average value of payment plans set up online is £2,821 while a total of £69.1m of tax is being managed under the scheme.
It allows payments to be spread over 12 months but from 1 February, an interest rate of 2.6% will apply.
Karl Khan, HMRC’s interim director general for customer services, said: “We know the past year has been tough for many businesses and self-employed people, which is why we’re helping them spread the cost of their tax bill into monthly payments.
“Self-assessment customers can use the self-serve Time to Pay facility for amounts up to £30,000 with almost 25,000 customers already benefiting from the service.”
Once people have completed their 2019/20 tax return and know how much tax they owe, they can apply for the payment plan via the government website. However, there are eligibility criteria to meet, including:
- no outstanding tax returns
- no other tax debts
- no other HMRC payment plans set up
- the debt needs to be between £32 and £30,000
- the payment plan needs to be set up no later than 60 days after the due date of a debt.
The deadline to submit the 2019/20 tax return falls on 31 January 2021.