For taxpayers who have trouble affording their tax bills, HRMC has updated its process for setting up time to pay arrangements.
If you have missed the self-assessment filing deadline of 31 January, and are struggling to cover your tax payments, you can now set up a time to pay arrangement online with HMRC.
The online option is only available once the initial deadline has passed, allowing taxpayers until the end of February to set up a plan for 2018/19. Any submission of a time to pay arrangement is still subject to approval. You will need to set up a Government Gateway ID if you don’t already have one.
If your instalment plan is agreed, you will not face a charge or penalties for late payment from the time that arrangement is agreed. However, any payments made after the deadline of the arrangement will be subject to interest, currently at 3.25%.
Outside of this window, you will need to deal directly with HMRC to negotiate settling outstanding tax debts. Time to pay arrangements are assessed against each individual’s financial circumstances, including income, expenditure and disposable assets, taking into account what they can afford and how long they may need to pay.
Once an arrangement is in place, it can be amended to take advantage of an upturn in your circumstances, or, if necessary, extended if your situation remains difficult. In these cases, you will accrue interest from the due date to the end of the arrangement, with the amount payable included in your overall debt under the arrangement.
In extremis, HMRC can force taxpayers to use savings or assets such as second properties to pay off their final debts, which would be discussed on a case by case basis. Your primary home and pension income are protected from any realisation of assets, although a charge can be made against your property to secure your debt.
Ideally you will never need to set up a time to pay arrangement if you plan your expenditure to include your tax liabilities. If you do find yourself in difficulty over tax payments, please let us know so we can help.