Self-assessment Payment on Account - do you need to defer?

  • 16th July 2020

While the business support schemes introduced by the government have been a lifeline for many businesses in these difficult times, there are many other businesses and employees which have not been financially affected by the coronavirus pandemic. One of the reliefs offered is the deferral of self-assessment payments on account (POA).

HMRC expects those people not adversely affected by the pandemic to pay their self-assessment payment on account (POA) by 31 July as normal. Only those taxpayers who are registered for self-assessment and will struggle to make the payment by 31 July due to the impact of coronavirus may defer the POA.

It is not clear how HMRC will police this, but as with all of the other support schemes it is clear that in one way or another they will be actively targeting those who have misused all of the support measures put in place. We would therefore suggest that if you are going to defer payment you make a written note giving your reasons. This may appear ultra-cautious but it will help to provide a defence should your decision to defer payment be challenged.

Taxpayers who do need to defer the POA can do so without asking HMRC’s permission. If they have a direct debit set up, that must be cancelled or the tax will be collected by HMRC as usual.

HMRC will not charge interest or penalties on the deferred POA, but it must be paid in full by 31 January 2021. The balancing payment of tax and CGT for 2019/20 will also be due in early 2021, along with the first POA for 2020/21. The size of the January payment could come as a nasty shock to those taxpayers who have not made provision for it.

If self-employed individuals pay their tax using a business debit card on or after 1st November 2020, they will be charged a fee equal to the amounts deducted by card processors for forwarding the payment to HMRC. Only payments made to HMRC by business credit card incur a transaction fee at present.

If you are unsure whether you need to defer or if you have any other questions, please speak to one of our advisors or contact us at info@forrester-boyd.co.uk

All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.