30/12/2024
Time to Pay Arrangements – Self Assessment Payments Due
Many individuals who prepare Tax Returns will have a tax payment due by 31 January 2025 and some taxpayers may struggle to meet the tax payments due.
HM Revenue & Customs (HMRC) provides an option for taxpayers to spread the cost of their tax bill with the Time to Pay system.
What is Time to Pay?
Time to Pay is a HMRC service that allows taxpayers to spread the cost of their Self-Assessment bill after arrangements have been made with HMRC. This arrangement is not automatic and is made at HMRC’s discretion. The time to pay arrangement will typically not last longer than 12 months.
By using Time to Pay, a taxpayer can avoid further late payment penalties, provided they stick to the agreed payment plan. An agreed arrangement will allow the taxpayer to cover regular monthly payments.
The scheme is set up for those that are unable to pay their tax bill by the normal deadline of 31 January. HMRC will only agree to set up a scheme if they are satisfied the taxpayer has taken active steps to help settle their bill such as:
- Approaching their bank to see if any assistance can be offered.
- Approaching creditors to ensure all outstanding amounts owed can be collected.
- Reduced or brought to an end, non-essential expenditure.
Key points to know:
- Eligibility: Taxpayers with a debt of under £30,000 can enter into a time to pay arrangement online with HMRC. The online facility can be used if the individual plans to pay the debt within 12 months and 60 days have not elapsed since the original payment due date. All other time to pay arrangements will need to be agreed with HMRC over the phone.
- Filing Deadline: The tax return and payment deadline for the 2023-2024 tax year is 31 January 2025. If an individual wishes to apply for a time to pay arrangement, they must have submitted their Tax Return on time. HMRC will not enter negotiations until they have received all outstanding Tax Returns
- Payment Terms: As mentioned, a taxpayer can arrange to spread payments over 12 months, making budgeting more manageable (an arrangement lasting over 12 months may apply in limited circumstances). Monthly payments must be budgeted for, as missed payments will result in interest and penalties.
Planning ahead and understanding your options can make tax return filing less stressful. If you’re worried about how you will pay your tax bill, Time to Pay may be a practical option for you to consider.
If you would like any help agreeing payment arrangements with HMRC or with filing your Self Assessment, please get in touch with a member of our tax team and we will be happy to help you!
If you would like more information on our Business Tax Services or VAT Returns Service, or have any queries please contact Joe Wilson on 023 8046 1237 or email Joe Wilson.
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