Deferred Taxes Due To Covid? It is Time to Pay
Published / Last Updated on 21/01/2021
Deferred Taxes Due To Covid? It’s Back To Haunt You ...
Income Tax
Self employed and perhaps those with rental property income were allowed to defer Income Tax Payments on Account (POA) due in July 2020. These are now payable 31st January 2021 meaning you may get a triple tax hit of the July 2020 2nd POA, January 21 Balance Payment (any extra taxes due for tax year 2019/20) plus the 1st POA for tax year 2020/21.
Balancing payments may be much more now but if you owe Self Assessment tax and your bill is less than £30,000 you may be able to pay in monthly instalments – you can set up this up online if within 60 days of self assessment date.
VAT
If you deferred VAT payments between 20 March and 30 June 2020 and still have those payments to make, you must:
- Pay the deferred VAT in full on or before 31 March 2021
- Opt in to the VAT deferral new payment scheme when it launches in 2021
Business rates for relief (or huge reductions) were granted for many commercial premises for tax year 2020/21 – this all stops on 31 March 2021. For larger commercial premises, business rates are on their way back.
Deferred Corporation Tax Filing
- Public limited companies (PLCs) Filing deadline was extended from 6 to 9 months
- Private company (Ltd) - Filing deadline was extended from 9 to 12 months
- Limited Liability Partnerships (LLP) - Filing deadline was extended from 9 to 12 months
That additional 3 month postponement may now start to catch up with you and we are still in lockdown 3. Many businesses may fold if they have not been able to trade to build up cashflow and pay not just this year’s tax liabilities but last year’s too.
Defer Paying Other Business Taxes or Individual Taxes?
These are not standard and you must contact HMRC direct to apply for a Time To Pay (TTP) arrangement with HMRC to defer payments which are due (or overdue) and e.g. make arrangement to pay overdue taxes in 12 monthly instalments. This again adds to the burden of not just paying this year’s taxes but also paying last year’s postponed taxes.
