HM Revenue & Customs (HMRC) has increased the threshold for Self-Assessment taxpayers to use its online self-service Time to Pay payment plan service from £10,000 in tax liabilities to £30,000.
The move means that more taxpayers will be able to spread the cost of their tax bills by paying in monthly instalments, without having to call HMRC.
The Chancellor announced in his Winter Economy Plan that taxpayers will be able to arrange a payment plan of up to 12 monthly instalments to cover tax payments deferred from July 2020.
HMRC now says that this also covers outstanding tax owed for 2019-20 and the first payment on account for the current tax year.
Taxpayers must set up a payment plan no later than 60 days after the due date of the tax debt to qualify for the payment plan, which, for tax payments due on 31 January 2021 is 1 April 2021.
However, setting up a payment plan more than 30 days after the due date of the tax debt will lead to late payment penalties. This means payment plans in respect of tax due on 31 January 2021 would need to be set up by 2 March 2021.
Unlike the previous Self-Assessment deferral of the second payment on account that was due on 31 July 2020, the new payment plans will be subject to interest from 1 February 2021.
To qualify for a payment plan using the online self-service Time-to-Pay system, taxpayers must:
- Have no outstanding tax returns;
- Have no other tax debts;
- Have no other HMRC payment plans set up; and
- Have a debt of between £32 and £30,000.
HMRC has also warned taxpayers against scammers claiming to be from HMRC and offering to set up payment plans. Currently, payment plans can only be set up by individual taxpayers.
HMRC says that taxpayers may have the option of using the online self-serve Time to Pay facility on gov.uk once they have completed their 2019-20 Self-Assessment tax return.
Taxpayers can also set up Time to Pay plans here.
Those with Self-Assessment debts of more than £30,000 or who need more than 12 months to pay the tax they owe may be able to set up a Time to Pay arrangement via the Self-Assessment Payment Helpline on 0300 200 3822.