Double Trouble?

/ Tax

Author: Henry Ejdelbaum

Tags: Tax

I don’t know if you remember (I nearly didn’t), but way back in June of 2020, the Chancellor, Rishi Sunak, confirmed that the government would allow self-employed individuals to defer the July tax payments in order to help them through the Covid crisis.

This was an automatic offer and no penalties or interest for late payment was charged. The payment was deferred until 31 January. However, this means that now, some people could be faced with a double bill.

So, if you deferred your payment what do we need to know?

If a self-assessment statement was received before 31 January 2021 it may still show the deferred July 2020 payment on account as due and payable now. The payment statement will now consist of three parts:

a) The delayed payment
b) The normal balancing payment
c) The first payment on account for the 2020/21 tax year.

Payment for the deferred July 2020 account can be made any time up to 31 Jan 2021 and incur no interest or penalty as long as it is paid in full by that date.

If the statement shows interest accruing, this will be for any other payments on account. The interest will only apply to those other payments, and not the deferred July 2020 payment.

If payment of a double tax bill is going to cause you problems, speak to your accountant in the first instance and they will explain what the options are.

Visit here to find your local AIMS Accountant.