£11billion cash flow boost available  to  'Self Assessment customers'  facing COVID-19 difficulties

Updated: Jul 20, 2020

HMRC are reminding taxi drivers and other taxpayers facing difficulty  paying their  second 2019/20  Self  Assessment  payment on account  that they can take advantage of  automatically  deferring  the  payment until 31 January 2021.

The second  Self Assessment  payment on account for 2019-20 is ordinarily due at the end of July, but the  Government  previously announced it is  supporting the self-employed and others by  allowing them  to  defer  this  payment. 

This  option to defer  is on top of additional support for the self-employed  through  £7.8 billion  in grants paid through the Self Employment Income Support Scheme (SEISS). 

The payment on account deferral will give immediate support to businesses and individuals by keeping cash at their disposal during this extraordinary time of uncertainty. 

To make this as hassle free as possible  customers  will not  need to contact HMRC to defer their payment  on account; they opt into  the  deferral by  simply  not paying their  tax bill  due by  31  July  2020.  If no payment is received,  HMRC  will automatically update their systems  to show payment has  been  deferred and no interest or penalties will be  incurred,  providing  it is paid in full by 31 January 2021. 

The only action  customers  may  need to take is to cancel their direct debit  if they have one  set up for their payments on account. 

Angela MacDonald, HMRC’s Director General of Customer Services, said:   “We want to support taxpayers as much as possible as they face uncertainty and difficult circumstances. That’s why we want to remind those who may struggle to pay a tax bill right now that they have the option to defer their  Self Assessment  payment.  They don’t need to do anything  to  take  advantage  of this  deferral. By simply not paying, HMRC will  know they have  deferred  and we will  do the rest.” 

A  projected estimate  based on 2019-20  Self  Assessment  receipts suggests that the July payment deferral will provide  up to  a  £11.8  billion cash flow boost to  taxpayers.  Around 2.7 million taxpayers are eligible for deferral, of which 1.3 million are self-employed individuals. 

HRMC have urged Self Assessment  taxpayers to think carefully about whether deferral is right for them.  It’s important to remember that the deferred amount will be due  on 31 January 2021, the same date that  any  2019/20 balancing  payment  and  first 2020/21 payment on account  will be due.  This could mean three separate payments  are due all at once.

They  may wish to contact HMRC about  paying  these  combined amounts  in instalments  if they have difficulty in paying them all in full at once.  

Payments on account are payable by  Self Assessment  taxpayers by 31 January and 31 July each year, unless: 

  • their last  Self Assessment  tax bill was less than £1,000 

  • they have already paid more than 80% of all the tax they owe at source, for example through  their  tax code. 

Each payment on account is  estimated, based on 50% of the previous year’s Self-Assessment tax bill  and they are advance payments towards the current year’s tax bill. 

Image credit: HMRC

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