Self Assessment Payment Plan

What is Self Assessment Payment Plan? 

Under Self Assessment Payment plan, the self-employed and other self-assessment taxpayers can apply online to spread the cost of their tax bills into 12 monthly payments, as part of the Chancellor’s Winter Jobs Plan.

Limit for Self Assessment Payment Plan

From October 1, 2020 HMRC increased the threshold to £30,000 for Self-Assessment customers. The enhanced payment arrangement is for taxpayers who are unable to pay their self-assessment bill that falls due on January 31, 2021.

What does it apply to?

It applies to all tax due on that date including:

• Deferred second payment on account for 2019/20 which was originally due on July 31,2020
• Balancing payment for 2019/20 due on January 31, 2021
• First payment on account for 2020/21 due on January 31, 2021

The amount due can be paid in monthly instalments over a period of up to 12 months.

HMRC revealed self-assessment customers who are due to make tax payments on January 31, 2021 could qualify for the time-to-pay scheme using the self-serve online platform, without needing to call HMRC.

Interest charges

Customers using self-serve time-to-pay will be required to pay any interest on the tax owed, which will be applied to any outstanding balance from February 1, 2021.

Conditions for Self Assessment Payment Plan

Taxpayers can set up a time to pay arrangement online if they meet the following requirements:

• They have no outstanding tax returns (the 2019/20 tax return must have been filed and it must also have been processed by HMRC which can take 72 hours for a return filed online)
• They must have no other tax debts, or HMRC payment plans set up
• The debt must be between £32 and £30,000, with payment plans needing to be set up no later than 60 days after the due date
• To avoid late payment penalties, the payment plan must be set up by the trigger date for late payment penalties which is 30 days after the due date