Self Assessment taxpayers can now apply for monthly payment plans

People who complete self assessment tax returns can now apply online to spread the cost of their tax bill into monthly payments without the need to call HM Revenue and Customs (HMRC).

As part of his speech on 24 September, the Chancellor announced that Self Assessment customers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019 to 2020 and their first payment on account bill for this current tax year in monthly instalments, up to 12 months, via the Time to Pay online service.
 

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Time to Pay can already be used to set up instalment arrangements for paying tax liabilities up to £10,000 but this threshold was increased to £30,000 for Self Assessment customers on 1 October 2020.

More than 11 million people complete a Self Assessment tax return each year. Once they have completed their tax return for the 2019 to 2020 tax year, those who have payments to make may have the option of using the online self-serve Time to Pay facility through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.

HMRC estimates around 95% of Self Assessment customers who are due to make payments on 31 January 2021 could qualify to implement a Time to Pay arrangement using the self-serve Time to Pay facility online, without needing to speak to an HMRC adviser.

Customers who wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:

• they need to have no:
  • outstanding tax returns
  • other tax debts
  • other HMRC payment plans set up
• the debt needs to be between £32 and £30,000
• the payment plan needs to be set up no later than 60 days after the due date of a debt

Customers using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from 1 February 2021.

Be aware of scams claiming to be from HMRC, offering to help you set up payment plans to pay any tax owed. Self Assessment customers can set up their own online payment plan to help spread the cost of their tax bill.

Find out more about Time to Pay arrangements:

• www.gov.uk/pay-self-assessment-tax-bill/pay-in-instalments

The deadline to complete Self Assessment tax returns for 2019 to 2020 is 31 January 2021.

If your Self Assessment debts are over £30,000, or you need longer than 12 months to pay your debt in full, you may still be able to set up a Time to Pay arrangement by calling the Self Assessment Payment Helpline on 0300 200 3822.