For the first time in four years, HMRC have updated their time to pay guidance. Specifically this covers when pay plans can be set up without having direct correspondence with HMRC. It is available for any tax liabilities regarding self-assessment, corporation tax, PAYE and VAT and can be set up online through the HMRC website.
Conditions that must be met for a payment plan to be set up this way are that all other debts with HMRC have previously been settled in full and any payment plan being set up must be within 60 days of the payment deadline. All relevant tax returns for self-assessment VAT or corporation tax as appropriate must have been filed.
HMRC implemented an affordability assessment last year and this lets a taxpayer put in their income and expenditure for the year which allows HMRC to create an affordable payment plan based on the information you have provided.
Such arrangements may be appropriate for taxpayers who may receive a larger bill than expected from HMRC and can give an easier way of paying them, rather than one lump sum. Instead, using the plan spreads up to a maximum of 12-month period. Interest (currently at 7%) is still however charged on the outstanding tax.
The payment plans do, however, have a limit to the amount that can be paid through this method. For self-assessment and corporation tax there is a maximum £30,000, and for a business owing a PAYE and VAT bill it is £100,000.
Note that if all the above conditions and thresholds are met only then are you eligible to set up a HMRC payment plan and otherwise would have to phone HMRC to discuss your position.
For anyone who has not yet paid the balance of their tax liability for the year ended 5 April 2024. You have until 2 March 2025 to do this, or you will incur a 5% penalty in addition to late payment interest. Having a payment plan in place before then will avoid that penalty.
If you are unsure of any aspect of organising time to pay with HMRC, please get in touch:
Findlay Burke, M&S Accountancy and Taxation Ltd
