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Details of enhanced time-to-pay for self assessment bills

5 October 2020: ICAEW’s Tax Faculty explains the enhanced payment arrangements announced by the Chancellor for those paying income and capital gains tax via self assessment. HMRC has increased the upper threshold for online applications for time-to-pay to £30,000.

Update 15 January: Please note that it is only outstanding self assessment returns and debts that prevent the use of the online time to pay system.

As part of his Winter Economy Plan on 24 September 2020, the Chancellor announced enhanced payment arrangements for taxpayers who are unable to pay their self assessment bill that falls due on 31 January 2021.

The enhanced payment arrangements applies to all tax due on that date including:

  • Deferred second payment on account for 2019/20 which was originally due on 31 July 2020.
  • Balancing payment for 2019/20 due on 31 January 2021.
  • First payment on account for 2020/21 due on 31 January 2021.

The amount due can be paid in monthly instalments over a period of up to 12 months.

Taxpayers can set up a time to pay arrangement online if they meet the following requirements:

  • They have no outstanding tax returns (the 2019/20 tax return must have been filed and it must also have been processed by HMRC which can take 72 hours for a return filed online).
  • They must have no other tax debts, or HMRC payment plans set up.
  • The debt must be between £32 and £30,000.
  • The payment plan must be set up no later than 60 days after the due date of a debt ie, by 1 April 202  1. However, to avoid late payment penalties the payment plan must be set up by the trigger date for late payment penalties which is 30 days after the due date ie, 2 March 2021.

Interest will be applied to any outstanding balance from 1 February 2021. This contrasts with the deferral of the second payment on account due in July 2020 on which no interest was charged.

Taxpayers who owe more than £30,000 or need longer than 12 months to pay may still be able to set up a time to pay arrangement by calling the self-assessment payment helpline on 0300 200 3822.

The online time to pay service is not available to agents; the Tax Faculty has asked HMRC to explore whether agents could be given access to this service.