HM Revenue and Customs (HMRC) has revamped its Time to Pay agreements for taxpayers requiring a payment plan to cover their outstanding tax.
Those with self-assessment tax payments due by 31st January can now negotiate a payment plan for their outstanding tax online. Time to Pay agreements are designed for self-employed professionals experiencing financial hardship and poor cashflow, giving them the capacity to formally defer payment over several months.
Historically, taxpayers unable to pay their tax bills on time, following the submission of their self-assessment tax returns, have negotiated these instalment plans with HMRC over the telephone.
These direct debit payments to HMRC do not incur late payment penalties or surcharges from the moment the payment plan is agreed, so long as taxpayers maintain their monthly payments. However, any payment plans agreed beyond the 31st January deadline incur 3.25% interest per annum.
There appears to have been a softening in HMRC’s stance of late towards individuals experiencing “financial hardship or in personal difficulty”. The tax authority updated its Time to Pay agreement guidance earlier this month, committing to providing “extra, bespoke support” for taxpayers that need it.
HMRC also sought to reinforce the benefits of its Time to Pay arrangements, adding that “90% of [its] Time to Pay arrangements complete successfully”, without further financial repercussions.
HMRC intends Time to Pay arrangements to be one-off payment plans, giving taxpayers additional breathing space when they need it most. However, those that do not keep up with their payments may be asked to pay the remaining outstanding amount in full.
These arrangements are only eligible for self-assessment tax and those that owe £10,000 or less. Individuals must also have no existing HMRC payment plans in place and no outstanding tax debts.
Help with Time to Pay
We can liaise with you on the tax to be paid and when the payments are due. Whether you require support with tax savings or setting up a Time to Pay arrangement, we’re here to help for a fixed, competitive price, allowing you to focus on doing what you do best – running your business.
To arrange a free initial consultation on your self-assessment situation, call our friendly, experienced team today on 0800 0523 555 or drop us a line using our online enquiry form and we’ll be in touch as soon as possible.