Self Assessment – Pay Later (COVID-19 Measure)
Individuals who submit a self assessment tax return are required (subject to certain exceptions) to make payments on account to HMRC by 31 January and 31 July. The payments are based on the previous years income tax liability, and represent an advance payment for the following year’s tax liability.
The government has announced that the July 2020 payment on account may be deferred to January 2021, for individuals in self assessment.
Initially the measure was only expected to apply the self-employed, however HMRC have since confirmed that it applies to all taxpayers with payment on account liabilities.
Deferral of July 2020 Payment
Due to the effect of COVID-19, the government has brought in several measures aimed at supporting individuals and businesses through this difficult time. As a part of this, they have announced that the payment on account due by 31 July 2020 may now be deferred to 31 January 2021.
No election is required, and the deferral will apply automatically. However it is optional, and so taxpayers who do not wish to face a larger tax bill in January 2021 may prefer to make the July 2020 payment on account as normal.
Individuals who have a direct debit set up to pay the payment on account automatically, will need to contact their bank to cancel the payment.
2019/20 Tax Return
As the 2019/20 tax year has now ended, individuals are now able to file their tax returns for this year with HMRC. The normal deadline to submit this years tax return is 31 January 2021 when filing online. Where a balancing payment is due, it is payable by the same date.
However, from a tax and cash flow planning perspective, it may be beneficial to file this tax return as soon as possible, to give taxpayers certainty on what tax they will need to pay by 31 January 2021, especially if they choose to defer their July 2020 payment on account.
New CGT Returns Required From 6 April 2020 (6 April 2020)
All about the Coronavirus Job Retention Scheme (27 March 2020)
Coronavirus Self-Employed Income Support Scheme (26 March 2020)