One in four self-employed people plan to delay their tax bill for 2019-20, with many taxpayers struggling financially because of Covid-19, a new survey has revealed.
With the 31 January 2019-2020 tax return and payment deadline just over two weeks away, 25% of those who complete tax returns are hoping to delay the payment due on 31 January, while one in five (22%) said they had already deferred July 2020’s tax payment, according to a poll of 4,000 Brits by Which?.
One in six (16%) taxpayers said they did not know how they planned to settle their tax bill or had not thought about it yet. Two in five (42%) people said they had deferred their July payment due to financial difficulties.
If you need to delay paying your tax bill, the government’s Time to Pay arrangement allows taxpayers pay their bills across 2021 in monthly instalments, but interest will be charged on the outstanding balance.
This is a different scheme from the July 2020 payment-on-account deferral, which allows self-employed taxpayers to defer paying the tax owed until 31 January 2021.
The poll suggests that Britons will rack up 19 million hours filling in their tax returns this year..
Why you should pay your tax on time
Failing to pay your tax bill by 31 January 2021 and not having alternative payment plan in place may result in fines. You’ll be charged 2.6% interest from the date the payment was due.
After 30 days, a charge equal to 5% of the outstanding tax will be added to your bill. On 31 July 2021, another 5% charge will be added, with an extra 5% fee added to your tax total after a year.
I can't pay my tax on time, what should I do?
If you'll struggle to pay your self-assessment tax bill on time, you may be able to set up a Time to Pay arrangement, but only if:
- you owe less than £30,000 in tax;
- it’s less than 60 days after the payment deadline.
- your tax returns are up to date
- you do not have any other payment plans or debts with HMRC; or
If you owe more than £30,000 or know you will need more than 12 months to pay your tax bill, you may be able to arrange an instalment plan as well.
If you're self-employed and you need advice on delaying paying your tax bill, it's best to call the HMRC’s Payment Support Service on 0300 200 3835.
Disclaimer: All information and links are correct at the time of publishing.