The Covid-19 pandemic has turned our personal and professional lives upside down during the past two years. Whilst easing lockdown restrictions and improving economic recovery mean there’s finally a light at the end of the tunnel, businesses and sole traders alike certainly won’t be greeting January’s Self-Assessment deadline with open arms.
With footfall and wider business demand significantly lower during the pandemic for many companies and self-employed professionals – plus the added pressure of having to pay tax due on SEISS grants and other government backed funding – you may find it difficult to settle what you owe come the deadline on 31st January 2022.
The digitalisation of HM Revenue & Customs’ Time to Pay facility could however provide the lifeline many businesses and sole traders need as they approach the January 2022 deadline. Here we share the facts about Time to Pay so you can celebrate Christmas and New Year with a weight off your shoulders.
What is Time to Pay?
Time to Pay is a facility provided by HM Revenue & Customs (HMRC) that gives customers the opportunity to pay their tax bills as affordable monthly repayments instead of lump sums.
The facility is no new thing – according to HMRC, their self-serve Time to Pay option has already helped 20,000 Self-Assessment customers spread the cost of their tax bill. The process has however only recently been digitalised to make it simpler for customers to make Time to Pay arrangements online.
How do Time to Pay arrangements work?
Thanks to recent developments, you can now apply online to set up your own Time to Pay arrangement. If you are applying as an individual, you must enter various details during the application process, including your income, disposable assets and expenditure. HMRC then uses this information to work out your debt repayments.
The process is much more complex for businesses looking for ‘Time to Pay’, with companies having to submit a proposal to communicate their financial circumstances and confirm a suitable arrangement.
It is important to note that with all Time to Pay arrangements, interest is charged from the original due date of the payment to the end of your Time to Pay plan.
Can I use the Time to Pay facility?
You will only be eligible to apply for a Time to Pay arrangement online if you owe less than £30,000 in tax and your tax return submissions are all up-to-date. You must not currently have any other payment plans or debts with HM Revenue and Customs, and must be within 60 days of the payment deadline.
If one or more of these do not apply to you, you should contact HMRC direct to discuss your circumstances.
Here at HJ Accountants, we offer a complete tax return service for businesses and self-employed professionals. For expert advice and support from experienced accountants, please get in touch with our team today.