Self Assessment tax return: Britons could receive payment plan support – get ready now

Martin Lewis provides advice on self-assessment tax deadline

Self Assessment tax returns must be filed to Her Majesty’s Revenue and Customs (HMRC) by January 31, 2021. The system is used by the Revenue to collect Income Tax, and will be used by millions of Britons each year. However, due to the pressures of COVID-19 and other issues, it is likely many people will be struggling to meet their financial obligations and could pay late. 

There are, however, ways to navigate the consequences of struggling to meet a tax bill or filing Self Assessment late.

To gain further insight, spoke to Mike Parkes, Technical Director at GoSimple Tax who provided guidance ahead of this week’s all-important deadline. 

Mr Parkes said: “If you cannot pay your Self Assessment tax bill, you might be able to set up a Time to Pay Arrangement with HMRC.

“This lets you spread the cost of your tax bill by paying what you owe through affordable monthly payments based on your income and expenditure.”

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Usually, if a tax bill is paid late, a person is required to pay interest on the amount they owe until the sum is met.

However, a Self Assessment payment plan could provide the appropriate solution to any pressures a person is facing.

By arranging this plan before the tax is due a person can avoid penalties, which could potentially snowball over time. 

It is important, though, to understand how this kind of arrangement works to ensure the right course of action is taken.

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Mr Parkes continued: “Time to Pay is based on an individual’s specific financial circumstances, so there is no ‘standard’ Time to Pay arrangement. 

“HMRC will establish your ability to pay using an ‘income and expenditure’ assessment. 

“This looks at your income, disposable assets and expenditure to calculate your disposable income.”

To be eligible to set up an online payment plan, a person needs to owe £30,000 or less to HMRC.

In addition, they must also have no other tax debts, and no other payment plans currently set up.

The payment plan, however, is intended to be a one-off support measure, and Britons must still keep up to date with their payments.

However, due to COVID-19, there may be some level of leeway for those struggling to meet the Self Assessment deadline.

HMRC has provided an important update, stating those struggling due to the pandemic, with a “reasonable excuse” will have their penalties waived.

However, Britons who file late will receive the penalty, and then shoulder the burden of proof in an appeals process. 

For this reason, if someone is struggling to pay their tax bill, Mr Parkes recommended filing early to see what help is available.

He concluded: “By getting your 2019/20 Self Assessment tax return in early, HMRC will be able to work out what you owe before the deadline, enabling you to set up a Time to Pay instalment arrangement. 

“But remember, once you’ve filed your return, you’ll need to wait at least 48 hours before you can set it up online.

“If you owe up to £30,000 you can do this online without having to contact HMRC directly.

“It’s important to note that by entering a Time to Pay arrangement before your tax bill is due, you can avoid late payment penalties, as long as you pay all the tax owing under that arrangement on time, which also attracts interest.”

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