Deferral of tax payments

Last updated 1 February 2021

The payment of the second Income Tax Payment on Account for 2019/20, originally due to be paid by 31 July 2020, was automatically deferred until 31 January 2021. No interest or penalties were charged during the period.

As well as this deferred amount being payable on 31 January 2021, any balancing payment for 2019/20 and the first payment on account for 2020/21 are also due on the same date.

If you are not able to pay your Income Tax for 2019/20 in full by 31 January 2021 you may be able arrange to pay the liability by instalments over 12 months. These instalments can be arranged once you have submitted your 2019/20 Tax Return.  If you owe up to £30,000 the Time to Pay instalment application can be made online to HMRC and will be automatically accepted if the conditions are satisfied (including all Tax Returns being up to date).

For higher tax bills, or to negotiate a longer payment period, you need to contact HMRC by phone.

Interest is still chargeable on the late paid Income Tax (currently at a rate of 2.6% per annum) but so long as you enter a Time to Pay arrangement before 2 March 2021 a 5% surcharge will not be imposed.

If your taxable income for 2020/21 is going to be lower than in 2019/20 there may also be the opportunity to reduce your payments on account, reducing the tax payable by 31 January 2021 and 31 July 2021.

If you are self-employed and you have PAYE and VAT liabilities it may be possible to arrange Time to Pay arrangements for these taxed.

For further information and guidance, please get in touch.