HMRC have now clarified the position regarding those entitled to defer the self-assessment tax payment falling due on 31 July 2020.
The original indication was that this would only apply to those whose self-assessment liability was generated by self-employment income. HMRC have now expanded this to cover all self-assessment liabilities. Whether it has been caused by rental income, dividends, high rate tax adjustments, etc.
The payment due on 31 July 2020 is the second instalment towards the 2019/20 tax liability, which will be confirmed by the 2020 Self Assessment Return in due course. There is no requirement to apply for deferment, this will be automatic. Anyone who wishes to take advantage of this but has already set up a direct debit to pay on 31 July 2020, will need to cancel the direct debit with their bank.
No penalties or interest will be charged on those who do not pay on 31 July 2020. The amount will instead become due on 31 January 2021. This gives an initial cashflow benefit but means that both the second instalment and balancing payment for 2019/20 will become payable on 31 January 2021. So please forward plan, as it could cause a cash flow issue at that point.
We recommend that, where possible, the 2020 Self-Assessment Return is prepared as soon as possible. This will let you establish exactly what your tax liabilities are going to be over the next 16 months and enable you to prepare appropriately.
The deferment is optional, so if you feel you are in a position to pay the July liability, it will still be possible to do so. If you have any further questions regarding this topic, please contact us.
April 1st, 2020
