It's not something they heavily promote but obviously this year there is a sizeable demand for it. )Maybe this trend of generosity will see our 'tax returned' in 2022?)
The HMRC payment plan is called a 'Time to Pay' (TTP) whereby taxpayers can use instalment arrangements to pay their self-assessment tax bills to help spread the cost.
This year, HMRC has increased the threshold from £10,000 to £30,000 resulting in over 25,000 people signing up and setting up the payment plans. A total of £69.1m of tax is being handled under the Time-to-Pay scheme with the average self-assessment payment plan being £2000-£3000.
Self-Employed peeps will be able to spread their payments over 12 months. Unfortunately and frustratingly from 1 February, an interest rate of 2.6% will apply.
TAXO'D TOP TIP - My freelance brothers and sisters - THIS IS NOT A FREE SERVICE FROM HMRC (is it ever?) However, TAXO'D are telling you this as it may offer a lifeline to those that need it now more than ever.
You can choose how much to pay straight away and how much you want to pay each month. If you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe.
HMRC have commented “We know the past year has been tough for many businesses and self-employed people, which is why we’re helping them spread the cost of their tax bill into monthly payments. Self-assessment customers can use the self-serve Time to Pay facility for amounts up to £30,000 with almost 25,000 customers already benefiting from the service.”
On completing your 2019/2020 tax return and now knowing what tax you owe, there are two ways to apply for the payment plan :
Is that it? Ha! Come on .. is it ever that easy?
These are the eligibility criteria:
Also worth noting is that you can set up a budget payment plan if you want to put money aside to cover your next Self Assessment tax bill. This is not a payment on account, which you make once every 6 months towards your next tax bill. The budget payment plan lets you:
You must be up to date with your previous Self Assessment payments.
To conclude, set up your plan using your HM Revenue and Customs (HMRC) online account. Go to the Direct Debit section and choose the budget payment option when filling in the Direct Debit form.If the amount in your budget payment plan does not cover your next bill in full, you’ll need to pay the difference by the payment deadlines.
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Disclaimer: This is simply a guide and should not be treated as tax advice. Contact HMRC directly if you need tax advice.