Posted: 14 / 10 / 2020
As part of The Chancellors efforts to ease the financial stresses caused by the pandemic, from 1 October the limit for Time to Pay, the online service used to set up payment plans for tax liabilities, has increased to £30,000.
Once taxpayers have completed their 2019/20 personal tax return they have the option of using the online self-serve Time to Pay facility (which can be accessed here) to set up a monthly direct debit to pay tax owed, up to a maximum 12-month period. Eligible taxpayers will be able to decide how much to pay straight away and how much to pay each month. Note that taxpayers need their own Government Gateway login to access the portal.
This scheme also allows those struggling to pay their deferred July 2020 payment on account bill, and first payment on account for 2020/21 to benefit from instalment arrangements.
Those wishing to do so must meet the following requirements:
- no outstanding tax returns or tax debts,
- no other HMRC payment plans set up,
- The tax owing needs to be between £32 and £30,000, and
- the payment plan needs to be set up no later than 60 days after the due date of a debt.
Taxpayers using the scheme will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from 1 February 2021. The current interest rate used by HMRC is 2.6% pa. Based on this, a taxpayer with £30,000 outstanding will accrue interest of roughly £2.14 per day.
On the payment plans, Head of Tax at Sedulo, David Evans, said:
We would recommend that any clients wishing to take advantage of the Time to Pay facility complete their tax return as soon as possible to quantify the debt and provide time to organise the payment arrangement.