Payment on Account Deferment
Due to the coronavirus outbreak, the UK government has announced that there is now no requirement to make a second payment on account for the year ended 5 April 2020, which was previously due for payment on 31 July 2020.
Normally taxpayers pay their tax in two installments – 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 so no action is required.
No Interest or Penalties
During the deferment period, no interest or penalties for late payment will be applied. This will bring a welcome cashflow advantage to many, 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 particularly important to complete your 2020 tax return as soon as possible after 5th April 2020 so that you can plan for a larger payment coming due in January 2021.
Please do get in touch with a member of our team if have any questions in respect of the above.
Stay in touch with all the latest announcements on the Job Retention Scheme and other support provided by the Government by visiting our dedicated Covid-19 page here