Due to the coronavirus covid-19 situation, HMRC has just announced a deferment on the 31st July 2020 payments on account.
Normally taxpayers pay their 2020 tax in two instalments – one on 31st January before the tax year finishes, and the second on 31st July afterwards.
The 31st July 2020 payment on account is deferred this year until 31st January 2021.
This will be an automatic deferment, with no action required by the taxpayer to take advantage of it. During the deferment period, no interest or penalties for late payment will be applied.
This will bring a welcome cashflow benefit to the self-employed and others with payments on account – however, you will need to be aware that the 31st January 2021 payment total could be quite large as it will comprise three separate payments:
- The deferred 31st July 2020 payment on account
- The balancing payment for 2020
- The first payment on account for 2021
It is therefore important to complete your 2020 tax return as soon as possible after 5th April 2020, so that you can plan for this large payment coming in January 2021.