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16th October 2020

Flexibility offered to self-assessment taxpayers

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HMRC has moved to help self-assessment taxpayers by expanding the payment of income tax by instalments and announcing that daily penalties for late filing will not be charged. The two measures are part of the government’s attempts to mitigate the effects of the coronavirus pandemic.

Payment by instalments

The limit on tax liabilities that can be settled via instalments has been raised from £10,000 to £30,000 as of 1 October 2020.  Almost all self-assessed taxpayers will now be able to use HMRC’s online ‘Time to Pay’ service to create a payment plan that can last up to twelve months. HMRC hopes that allowing taxpayers to spread their payments across 2021 will ease the financial pressure that many have been under. The deadline for setting up the payment plan is 60 days after the date of the debt becoming due.

Taxpayers should note that interest will be charged on the unpaid tax. Therefore, whilst payments can be spread across the year, this is not without cost. Taxpayers with a liability of over £30,000 and/or those that need more than twelve months to pay will still need to contact HMRC and seek to agree a payment plan.


HMRC has confirmed that it will not charge daily penalties for the late filing of 2018-19 tax returns where taxpayers are more than three months late if the delay can be shown to be due to coronavirus. HMRC had previously confirmed that being affected by coronavirus could be a reasonable excuse and the latest concession could save taxpayers from penalties of up to £900. However, even if a taxpayer can show the delay was due to the pandemic, the six and twelve-month penalties for late filing will continue to be charged. Those charges can be up to 5% of the tax due so taxpayers should be careful not to unreasonably delay their filing.

For more information about any of the items raised in this article please contact Eric Wardle 01604 463110 or click here to email Eric.