As part of his Winter Economy Plan, Chancellor Rishi Sunak has just announced further coronavirus support in the form of ongoing deferment of self assessment tax liabilities.
At the start of the pandemic, one of the first tax announcements made was a deferral of the second income tax payment on account for 2019/20, due on 31 July 2020. Taxpayers were given the option to defer this payment until 31 January 2021 when the final balance of tax for 2019/20 would also normally be due for payment.
The Chancellor is now giving taxpayers even longer to pay all of the taxes otherwise falling due on 31 January 2021 including:
- The payment on account already deferred from July 2020;
- Any balance of income tax payable for the year ended 5 April 2020;
- Capital gains tax payable for the year ended 5 April 2020; and
- The first payment on account towards the 2020/21 income tax liability.
Unlike the previous deferral which did not require any action, this time taxpayers will have to apply for the ability to spread the tax over twelve monthly instalments. We understand that:
- Where the total tax due doesn’t exceed £30,000, the application for time to pay is expected to be agreed automatically via an online application process; however
- If the tax due exceeds £30,000 or the taxpayer needs longer to pay, HMRC’s telephone service will be available to agree a bespoke payment plan.
Whilst this is a welcome support measure, careful cashflow planning will be required to ensure future liabilities can be met as and when they arise.