Planning to defer Your Self Assessment Payment?

Are you planning to defer your Self Assessment Payment? Are you facing cash flow difficulties? Self Employed Buy-to-let landlords suffering hardship as a consequence of the coronavirus pandemic can defer their July tax payment on account. And if you plan in doing so then let HMRC know immediately is the short answer.

Research shows that not all self-assessment tax-paying landlords are aware that HM Revenue and Customs (HMRC) has updated its guidance enabling people to benefit from an extension to the July payment date.

Consequently, anyone who is due to submit a self-assessment income tax payment on July 31, including those with rental and investment income, now has until January 31, 2021 to make this payment. According to the guidance, this deferment is optional and anyone who is still able to pay their second self-assessment payment by the July deadline are being urged to do so.

No penalties or interest for late payment will be charged in the deferral period. But for those of you planning to defer your self-assessment payment on account, it's important to think what level of tax you will be paying in January from the end of tax year 2020? If you havent been hit by a lack of income due to Covid-19 then then you may as well pay the tax due by the end of July. No point deferring until January only to be faced with a double bill.

Many taxpayers will still be worried that even if they pay now, they may not be able to pay what they owe in January. But if you are in this position, simply alert HMRC now so that they will be able to get a pay arrangement. I'm sure HMRC will be sympathetic to what has happened to people’s finances but the earlier they are told the better it will be for both parties. And its important to note that this is a deferment not an exemption and you are still liable.

 
How do Taxpayers fund their tax bills in January 2021, potentially before they have seen a full recovery of their business? 

It's vital that they think now about how they will cope so that if necessary, they can approach HMRC for a Time to Pay (TTP) arrangement before they face an imminent deadline. 
I wouldn't recommend leaving things too late in the day HMRC will not be so sympathetic and could launch inquiries which will be time consuming for HMRC and stressful for the taxpayer. All that is required is a sensible piece of housekeeping.

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