You say I don’t need to pay tax now, but which are automatically deferred, and which do I have to arrange?
The Government has announced a lot of support for Small Businesses, to help us through the current Pandemic. Some of the financial support announced includes deferring or arranging time to pay for your business and personal taxes.
This is fantastic news, however, we are seeing some confusion around which taxes are automatically deferred, and which taxes you need to arrange Time to Pay with HMRC.
So we’re here to make sense of everything:
Which taxes are automatically deferred?
The only taxes automatically deferred are VAT between 20 March and 30 June, and your July 2020 self-assessment tax payment.
VAT due for the period between 20 March 2020 and 30 June 2020 is automatically deferred.
Any VAT due during this period will be automatically deferred until 31 March 2021.
This means that HMRC will not chase for payment for any VAT due between these dates.
What you need to do:
Cancel your HMRC VAT DD straightaway with your bank.
You will get an email from HMRC confirming the DD has been cancelled, and asking for payment another way – ignore this request for payment, it is an automated email!
Keep a record of the VAT due, as you will have to pay this by 31 March 2021.
*If we manage your VAT returns, we are keeping a record of the VAT that you have deferred.
2. July 2020 Self Assessment Payment on Account
This payment on account is your second payment on account towards your 2019/2020 personal tax.
You should know whether this is due from your accountant, a statement from HMRC, or from your HMRC online tax account.
This is being automatically deferred to 31 January 2021.
What you need to do:
Don’t make your 31 July 2020 payment. There is no DD for your self-assessment.
Keep a record of the July payment, as it will become due in January 2021.
*If we manage your personal tax, we are keeping a record of this payment on account.
Taxes you must arrange Time to Pay for:
HMRC have put together a new Time to Pay Helpline who you can call if you’ve been affected by the coronavirus pandemic, and find yourself unable to pay your PAYE or Corporation Tax. You can also arrange time to pay for any other taxes not being deferred (see above).
You can arrange repayments over an agreed period of time.
You can also delay your first payment by 3 months.
Call 0800 024 1222 Monday to Friday between 8:00 and 16:00.
PAYE and NIC should still be paid by you as an employer, even though you can claim furlough grants to cover 80% of your employees’ gross wage.
You can call the Time to Pay Helpline above to arrange to pay in instalments.
2. Corporation Tax
Any corporation tax you currently owe can be discussed with the Time to Pay team, so please call them.
3. VAT due before 20 March 2020
If your VAT is due between 20 March 2020 and 30 June 2020, this will be automatically deferred as above.
However, if you have any old VAT due prior to 20 March, please take advantage of the new Time to Pay Helpline.
4. Self-Assessment amounts overdue
Your July 2020 self-assessment payment on account is deferred until 31 January 2021, as above.
However, talk to the new Time to Pay Helpline to arrange a payment plan of any self-assessment tax already overdue now.
Info you need before you call the Time to Pay Helpline:
- Make sure the relevant filing has been made for the tax you want to discuss.
- eg if it’s PAYE, make sure the relevant month’s payroll has been filed with HMRC
- The relevant tax reference for the tax you want to arrange a payment plan for.
- The amount of tax that is outstanding (ignore any VAT or self-assessment being deferred above)
- How many months you want to pay your tax over.
- How much you want to pay each month.
- For the above 4 taxes, please call the Time to Pay Helpline
*we would always advise that you call HMRC yourself to arrange a payment plan, as you will be better placed to know what you can and cant’ afford as a monthly repayment.
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