At the start of the coronavirus pandemic, the UK Government gave individuals and businesses the option to defer, until 2021, payments of Income Tax due by 31 July 2020 and VAT due in the period 20 March to 30 June 2020.
In both cases, you could pay the tax or VAT by the original due date, how and no interest or late payment penalties would be added to those deferred tax debts.
However, roll on to 31 January 2021, you may be looking at four different amounts of tax becoming due for payment:
a) Second payment on account for 2019/20 (deferred from 31 July 2020)
b) Balancing payment for2019/20
c) Capital Gains Tax for 2019/20 (if not paid under the new 30-day rule for UK residential property) d) First payment on account for 2020/21 Taxpayers with up to £30,000 of self-assessment liabilities due on 31 January 2021, whether deferred from July 2020 or otherwise, can pay in 12 monthly instalments under the time to pay arrangements.
This means the final payment will not be due until January 2022. Where the total tax due does not exceed £30,000, an application (made online) for deferral will be automatically granted. If the total tax due exceeds £30,000, or you need longer to pay, you will be able to call HMRC to agree to a bespoke payment plan.
Where you have deferred VAT which was due in the period from 20 March to 30 June 2020, that VAT will be payable by 31 March 2021. However, you will be able to apply to spread the deferred VATpayment over smaller instalments through until March 2022. This deferred VAT will is not subject to interest or penalties if the payments are made on the dates as agreed.
This can be daunting and dates missed can lead to you losing the benefits if delayed payments if you need assistance then ask now, call Merranti and we can assist in making sense of dates and deferrals.