(December 2020) The coronavirus outbreak has had an unprecedented impact on businesses and individuals. If you are self-employed, you may be concerned about paying your Self Assessment tax bill due on 31 January 2021. In this post, we look at some of your options and government schemes set up to help businesses during the pandemic.
If you currently owe tax from previous years, but your business is having difficulties with cash flow, you can contact the HMRC coronavirus helpline (0800 024 1222). They may be able to set up a Time to Pay arrangement allowing you to pay off what you owe over a period of time and avoid debt recovery action.
If you are in Self-Assessment, you may have several payments due on 31 January 2021. Typically, you may be required to pay:
After you have completed and submitted your tax return for 2019/20, you will know exactly how much you are due to pay before 31 January 2021. If you realise that you are not able to pay the full amount owed before this date, you may be able to set up a ‘Time to Pay’ arrangement.
Time to Pay arrangements allow you to spread the amount owed over a period of up to 12 months. You can use the online self-serve tool on GOV.UK. If you successfully set up payments using the self-serve tool, you will not require to contact HMRC directly, unless you wish to change your payment plan at a later date.
To use the online self-serve tool, you must have no outstanding tax returns, HMRC debts or existing plans in place with HMRC. Also, the amount owed must be less than £30,000.
If you are setting up an instalment plan with HMRC, it is essential to be aware that you will incur interest. Interest is currently set at a rate of 2.6% per annum and will be charged from 1 February 2021 on any amounts owed that have not been paid by 31 January 2021 until payment is received.
You can find more details about financial support for small businesses on the government website. However, your local council may be able to provide you with information about any grants or additional support that may be available to you. If your business has had to close due to lockdown restrictions in England, you can find details of grants available to you on the government website.
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