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As Chancellor of the Exchequer, Rishi Sunak, announced in his Winter Economy Plan in September, the 2019-20 Personal Tax Payment Plan system is now live.
HMRC has now launched an online platform to enable you to arrange an instalment plan for your 2019-20 tax payment that would normally be due on 31st January 2021.
This has to be done by the individual. Accountants and tax advisors like CooperFaure are prohibited from accessing this service through our Agent’s portal.
There are five qualifying criteria:
– you must have no outstanding tax returns, unpaid debts or existing payment plans with HMRC;
– your tax due is no more than £30,000;
– you must set up the payment plan within sixty days of the original payment date (in other words by 31st March 2021);
– you have to pay the instalments by direct debit; and
– your tax is paid in full by the end of January 2022.
If you qualify and are looking to pay your tax bill over time, the HMRC link is here.
For those without a Government Gateway account, this can be set up at the beginning of the process in the same manner as under the Self-Employment Income Support Scheme.
Most importantly, your 2019-20 tax return needs to have been submitted to HMRC before accessing this service for there to be visibility on the tax due.
For a large percentage of those who submit a personal tax return, in particular the self-employed, the payment due at the end of January would usually consist of the balancing payment for the 2019-20 tax year and the first payment on account for the 2020-21 tax year.
It may also need to cover the second payment on account for the 2019-20 tax year, if you took the option to defer this payment that was originally due by 31st July 2020.
As part of this process, our advice is to look at whether the level of the first payment on account for the 2020-21 tax year is appropriate.
The HMRC system is geared that the tax you pay in one tax year is a fair basis for the tax you will pay in the next. For many, the impact of COVID-19 means that this simply will not be the case and you have the right to reduce the 2020-21 payments on account accordingly.
However, in determining your likely 2020-21 income compared 2019-20, do not forget that any payments you receive from the Self Employment Income Support Scheme are taxable income that need to be included.
The HMRC platform will give you option to make an initial lump sum payment and to set the amount of the monthly instalment and the time period, up to the maximum of twelve months if the plan is implemented before 31st January 2021.
Whilst HMRC are indicating that around 95% of taxpayers due to make a payment by 31st January 2021 will qualify to use this self-serve option, all is not lost if you cannot.
You can contact either the Self-Assessment Payment Helpline on 0300 200 3822 or the COVID-19 Helpline on 0800 024 1222 to discuss the options with HMRC.
If you are looking for a payment period of over twelve months, HMRC will ask for more details, such as on your current level of income and expenditure, before agreeing an extension.
If you have any questions or concerns on your 2019-20 tax return, please contact us at personal.tax@cooperfaure.co.uk for an initial free and independent chat.