Self assessment ‘time to pay’ threshold raised to £30,000

HMRC has made it easier for self assessment taxpayers to pay the tax they owe incrementally on a monthly basis, by extending the threshold for ‘time to pay’ applications, as part of efforts to ease financial stresses cause by the pandemic

From 1 October, the limit for time to pay, the online payment plan service used to set up instalment arrangements for paying tax liabilities, is increased to £30,000, up from £10,000.

The increased £30,000 threshold follows the Chancellor of the Exchequer’s announcement on 24 September to increase support for businesses and individuals through the uncertain months ahead.

As part of his speech, the Chancellor announced that self assessment taxpayers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019/20 and their first payment on account bill for this current tax year in monthly instalments, rather than as two payment in January and July.

Jesse Norman, financial secretary to the Treasury, said: ‘We are supporting jobs by giving more breathing space to up to 11m self assessment taxpayers when managing their tax affairs.

‘Enhancing time to pay should ease the financial burdens and protect the livelihoods of these taxpayers, as they navigate the months ahead.’

Once they have completed their tax return for the 2019/20 tax year, those who have payments to make have the option of using the online self-serve time to pay facility 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 taxpayers who are due to make payments on 31 January 2021 could qualify to implement a time to pay arrangement using the online facility, without needing to speak to an HMRC adviser.

Those wishing to do so must meet a set of requirements.

These are that they have no outstanding tax returns, no other tax debts, and other HMRC payment plans set up. The tax owing needs to be between £32 and £30,000, and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Taxpayers 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.

Those with self assessment tax payments over £30,000, or who need longer than 12 months to pay in full, may still be able to set up a time to pay arrangement by calling the self assessment payment helpline on 0300 200 3822.

The deadline to complete self assessment tax returns for 2019/20 is 31 January 2021.

Useful links:

Pay your self assessment tax bill information

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