If you missed the payment deadline for Self Assessment on 31st January, there’s good news.
HMRC are giving you more time to pay your Self Assessment Tax due to the impact of Covid-19.
Although the deadline didn’t change in 2021 despite the financial hardship faced by many businesses in the Covid Crisis, taxpayers will have until 1st April 2021 to set up a payment plan. As long as you set up a plan by this date, you won’t be charged the 5% late payment penalty on the amount.
If you can pay in full, it’s best to do that (and save yourself the debt hassle)
It has been a tough year, and there’s no shame in spreading out the cost of your unpaid self assessment tax if you need to. Many businesses have made use of this facility.
That being said, if you have the cash flow means to pay your Self Assessment Tax in one go, we advise you to. It’s best to sort it now, rather than focus on other things and let it become a later problem.
There are several ways you can go about paying in full now, either online here, by bank or by post.
If you really can’t, the Online Time to Pay facility allows you to spread the cost of your Self Assessment tax bill
By setting up a payment plan no later than midnight on the 1st April, you can avoid a payment penalty and spread the cost of your Self Assessment Tax bill into monthly installments until January 2022.
How do you set up a payment plan?
If you’ve yet to file your 2019 to 2020 Self Assessment return, you will need to do that as soon as possible. This will tell HMRC what you owe, so you’re able to set up a payment plan. Note that once you’ve filed your return you will have a 72 hour wait before you can set up your Time to Pay arrangement online.
You can set up your payment plan online here, provided you’re eligible. This means you:
- have filed your 2019 to 2020 tax return
- owe £30,000 or less
- have no other tax debts
- have no other HMRC payment plans set up
Once you have this set up, it’s important to try and keep to the payments you’ve agreed in your plan. If not, you may find HMRC ask you to pay the entire outstanding amount.
If you’re having bigger cash flow problems, there is help available to you
Cash is what makes or breaks our businesses. Unfortunately, we’ve seen businesses with the best ideas and the best intentions fail because of cash flow problems – global crisis or no global crisis.
So whether this was the first time you had to think about paying tax late, or this is just one of many times you’ve faced the threat of a penalty, we can all learn something from the experience to make our businesses better.
Check out all our cashflow hub and please feel free to take from our free resources. We’ve documented all kinds of tips to help you stay in control, finance your business and worry less about money.