Further support to COVID19 impacted businesses
14 July 2020
HMRC has advised that Self-Assessment (SA) taxpayers can automatically defer their July payment on account and are actively reminding those for whom this is applicable.
Ordinarily, the self-employed who are liable to make a payment on account, after filing their 2019-2020 SA tax return, are expected to make a payment on account by the end of July 2020. As announced previously by the government, anyone who has difficulty making this payment can take advantage by automatically deferring the payment until 31 January 2021.
Unlike the Self Employment Income Support Scheme (SEISS) grants, deferral does not need to be applied for nor contact made to HMRC for this to be actioned. Those wishing to defer, simply need to not pay their payment on account, which would be due 31 July 2020. If no payment is received by HMRC, systems will be automatically updated to show that the payment has been deferred and block any interest or penalties to the account, on the proviso that the payment is made by 31 January 2021.
Angela MacDonald, HMRC’s Director General of Customer Services, said:
“We want to support taxpayers as much as possible as they face uncertainty and difficult circumstances. That’s why we want to remind those who may struggle to pay a tax bill right now that they have the option to defer their Self-Assessment payment.”
“They don’t need to do anything to take advantage of this deferral. By simply not paying, HMRC will know they have deferred, and we will do the rest.”
Estimates based on 2019 to 2020 SA receipts indicate that the July payment deferral will deliver up to a £11.8 billion cash flow boost to taxpayers with around 2.7 million taxpayers being entitled to the deferral.
SA taxpayers should think carefully about whether deferral is the right option for them as the timing for the payment coincides with when any balancing payments for 2019 to 2020 and the first 2020 to 2021 payment on account will be due. This could mean three separate payments being due at the same time.
Any concerns about payment of the above should be advised to HMRC to possibly arrange for them to be paid in instalments, rather than all at once
As a reminder, payments on account are payable by SA taxpayers by 31 January and 31 July each year, unless:
Their last Self-Assessment tax bill was less than £1,000
They have already paid more than 80% of all the tax they owe at source, for example through their tax code.
Payments on account are estimated, based on 50% of the previous year’s SA tax bill and they are advance payments towards the current year’s tax bill.