UK taxpayers with a liability of more than £1,000 for the year are often required to make a payment on account. These payments are due on 31st January and 31st July respectively ...
For the last financial year, over 11 million taxpayers submitted returns to HMRC, and many of these people would be expected to make a payment on account by 31st July 2020. Early in the Coronavirus outbreak, HMRC allowed individuals to defer the 31st July payment on account.
However, it is incorrect to assume deferral is available to everyone. It is only available to those finding it difficult to make such a payment as they have been affected by Coronavirus and have lost income because of it!
HMRC is estimated to collect slightly less than £32 billion in Income Tax for the year ending 5th April 2020 via individuals submitting self-assessment tax returns. The Treasury faces a shortfall of billions from improper payment on account deferrals.
HMRC has not published specific guidance on what they define as 'struggling to pay', but they have published examples of what they consider 'adversely affected' means in the context of the Self-Employed Income Support Scheme which you can use as guidance yourself.
But remember, HMRC could ask you to demonstrate that you were struggling to pay and the SEISS adversely affected examples may be used when forming their opinion as to whether you were correct to defer or not.
My advice to them is always the same. If you can afford to make the 31st July payment on account on time, then you really should. If you're struggling because of genuine cash flow issues due to the Coronavirus outbreak, then consider deferring.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.