Financially, January is always a difficult month. Most employees get paid early and the increased Christmas expense drains the coffers, with many people wishing for January to pass so that a new pay date is hit and the financial pressure is eased.
It is typically unhelpful, therefore, that the Self-Assessment payment deadline is 31 January- prolonging some families financial difficulty.
Previously it was necessary, if a taxpayer was unable to make payment by 31 January, to negotiate with HMRC to enter into a payment plan. The effect of agreeing a plan would be to defer the payment over a period of time and more importantly avoid both penalties and the 5% surcharge for late payment of more than 30 days, and even the additional 5% surcharge for late payment beyond 6 months after the 31 January deadline. Interest was still charged from the due date (3.25% per annum).
It is now no longer necessary to go through the process with HMRC by telephone, which will be a relief to many who perhaps feel uneasy about direct conversations with the authorities.
It is now possible to enter into an instalment plan, subject to electronic approval, via the following link: https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments
Interest will still be payable and in order to set up a payment plan, you need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you set up a payment plan.
To be eligible to set up an online payment plan you need to:
- owe £10,000 or less
- have no other tax debts
- have no other HMRC payment plans set up
This is for Self-Assessment tax only.
All other payment plans would have to be agreed with the Payment Support Service on: 0300 200 3835 (Mon-Fri 8am-8pm; Sat 8am-4pm). When contacting HMRC it is important to have the following information to hand:
- reference number relating to the tax bill;
- details of the amount of tax you cannot pay, covering all debts outstanding to HMRC;
- reasons why you are unable to pay, current financial circumstances and indication of what you could afford to pay;
- what you’ve done to try to pay your bill on time and in full;
- how your finances are likely to change in future; and
- bank account details to set up a Direct Debit.