Quick guide to Self-Assessment tax returns and coronavirus schemes

Mark Poulton is a Partner and Head of the Corporate & Commercial Department and can be contacted on mp@stephenrimmer.com or 01323 434420

The coronavirus outbreak has had an unprecedented impact on businesses and individuals. If you are self-employed, you may be concerned about paying your Self Assessment tax bill due on 31 January 2021. In this post, we look at some of your options and government schemes set up to help businesses during the pandemic.

What if I have tax payments due?

If you currently owe tax from previous years, but your business is having difficulties with cash flow, you can contact the HMRC coronavirus helpline (0800 024 1222). They may be able to set up a Time to Pay arrangement allowing you to pay off what you owe over a period of time and avoid debt recovery action.

On 31 January 2021

If you are in Self-Assessment, you may have several payments due on 31 January 2021. Typically, you may be required to pay:

• The balance payment for the 2019/20 tax year
• The first payment on account for the 2020/21 tax year
• The second payment on account for the 2019/20 tax year if you opted to defer from 31 July 2020

After you have completed and submitted your tax return for 2019/20, you will know exactly how much you are due to pay before 31 January 2021. If you realise that you are not able to pay the full amount owed before this date, you may be able to set up a Time to Pay' arrangement.

Time to Pay arrangements allow you to spread the amount owed over a period of up to 12 months. You can use the online self-serve tool on GOV.UK. If you successfully set up payments using the self-serve tool, you will not require to contact HMRC directly, unless you wish to change your payment plan at a later date.

To use the online self-serve tool, you must have no outstanding tax returns, HMRC debts or existing plans in place with HMRC. Also, the amount owed must be less than £30,000.

Payment plans and interest

If you are setting up an instalment plan with HMRC, it is essential to be aware that you will incur interest. Interest is currently set at a rate of 2.6% per annum and will be charged from 1 February 2021 on any amounts owed that have not been paid by 31 January 2021 until payment is received.

Other support for the self-employed

You can find more details about financial support for small businesses on the government website. However, your local council may be able to provide you with information about any grants or additional support that may be available to you.  If your business has had to close due to lockdown restrictions in England, you can find details of grants available to you on the government website.