Background
Taxpayers registered under Self Assessment will need to make their second payment on account for the 2019/20 tax year by the deadline of 31 July 2020.
However, many individuals and trusts will recall that the Government announced as part of its COVID-19 assistance packages that taxpayers impacted by the coronavirus would have the option to defer their July 2020 payment on account until 31 January 2021. HMRC have recently updated their guidance in regard to deferring the second Self Assessment payment on account in order to clarify the situation.
Details
Under HMRC’s new guidance, deferral of the 31 July 2020 payment is available for any Self Assessment taxpayer who is “…finding it difficult to make (their) second payment on account by 31 July 2020 due to the impact of coronavirus…”.
Tax payers are still expected by HMRC to make the payment by 31 July 2020 as normal if they are able to do so.
For those taxpayers who find it necessary to take the deferral option, there is no requirement to inform HMRC of the deferral and no interest will be charged on the deferred amount.
Many taxpayers will have recently received a Self Assessment statement and may have been surprised to see it showing 31 January 2021 as the due date for paying the second payment on account for 2019/20. This is because HMRC had to change the due date in it’s IT systems in order to ensure no interest or penalties would be charged where payment is deferred until 31 January 2021.
Therefore, the statements issued by HMRC give the incorrect impression that the second payment on account is not due by 31 July 2020, which is not strictly correct. This is only the position where a taxpayer is struggling to make the July 2020 deadline due to the coronavirus pandemic.
For those taxpayers considering a deferral they should remember that they may well face a larger than usual tax bill in January 2021 when they will not only need to pay the second payment on account for 2019/20, but also any balancing amount for 2019/20 together with their first payment on account for 2020/21. It may be possible to reduce the payment on account for 2020/21 if income is less than in the 2019/20 tax year.
Our updated working arrangement – We remain ‘Open for business’
You may have seen in the press that there was an electrical fire at Regent House, but fortunately our office has not been affected and we remain open for business as normal.
As for the past few weeks, our staff have returned to office based working on a rota basis, each attending two days a week, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
If you would like more information on any of the above or if you require any advice or assistance regarding payment on account please speak to your usual contact at the firm.
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