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Late Payment Penalty Notices From HMRC

If you deferred your payment on account due by 31 July, it is due for payment by 31 January 2021.

We are also in another national lockdown after such a challenging year.  Many people are struggling to be able to make their January tax payment, due in less than two weeks.

Having also deferred a payment from July may mean that some people have their July installment due, plus a balancing payment and potentially a payment on account for 2020/21 all due for payment by 31 January. You can find the details of tax that you owe in your government gateway account.

HMRC have the facility to apply online for a ‘Time to Pay’ installment agreement. You can apply using your Government Gateway account.  You can use this to arrange a payment plan giving you time to pay without accruing late payment penalties (interest is still payable).  This is available if your liability is up to £30,000. You can arrange this online 48 hours after submitting your tax return for 2019/20 without having to phone them.

HMRC will not consider a payment plan unless you have submitted your 2019/20 tax return and have definite figures to agree payment on.

Full details of the options available to pay your income tax liability can be found at:  https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19.

Please be aware that penalties and late interest may still be charged on outstanding amounts not paid by 31 January 2021.  If you know you will have problems making the payment, please make your application as soon as possible.

Reducing payments on account

If you have a payment on account for 20/21 due in January please note this will be based on the assumption by HMRC that your taxable income for the year to April 2021 will be the same as 2020. Obviously, this year that may not be the case.  You can apply to reduce this figure based on a more realistic sum. Please note that if you do not pay enough, interest will be charged on the underpayment.

If you feel this may affect you, contact us for advice on how to reduce your payment on account.

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