With an increasing pressure on the government to provide financial support to UK taxpayers during the COVID-19 pandemic, amongst other proposals, the government announced the option for taxpayers to defer the payment of their second payment on account for 2019/20. Provided the required payment is made before 31 January 2021, no interest charges will be applied.
Initially it was unclear whether this would apply only to self-employed individuals. Clarification has now been given that it will apply to all taxpayers automatically, so no claims or applications are required.
Under normal circumstances, the second instalment would have been due by 31 July 2020. HMRC have now confirmed that taxpayers will have until 31 January 2021 to pay this, when the balancing liability for 2019/20 is due. However, it must be borne in mind that, if income levels were fairly similar between 2018/19 and 2019/20, then postponement of such payment will result in a much larger amount becoming due by 31 January 2021 – for cash flow purposes, therefore, where possible, we would suggest making payments as normal.
As always, if you are able to draft your 2019/20 tax return, we suggest that you do not delay in doing so. Not only will this prevent a last minute panic, but will also help you to manage your cash flow during this unprecedented time.
If you were self-employed during 2018/19 and have not yet submitted your 2018/19 tax return (which was due for filing by 31 January 2020), you have until 23 April 2020 to file your return and ensure you will be able to apply for the self-employment Income Support Scheme. Failure to do so may jeopardise your eligibility to the scheme.