You Get a Payment Extension Due to COVID-19. But How Does it Work?
Advanced Accountancy are commited to communicating with you at this worrying time. We understand that the information on the Gov website is overwhelming and complicated and it’s hard to sit down and decipher pages of new information with so much chaos going on around us.
Well, now you don’t have to.
Welcome to your daily ‘under the spotlight’ blog which will simplify and breakdown each Government scheme that has been put into place over the last few days.
Next up under the spotlight is……
Support for businesses through deferring VAT and Income Tax payments
VAT and income tax payments can often put financial stress on businesses at the best of times. Under the current circumstances with many business incomes looking uncertain in the coming months that stress has increased drastically.
With this in mind the UK government have pledged to support businesses by deferring Valued Added Tax (VAT) payments for 3 months after the usual payment deadline.
Income Tax payments that are currently due in July 2020 under the Self-Assessment system and may now be deferred until January 2021. This means that we now have 10 months to make that payment which will undoubtedly be an enormous help.
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020. This has added an extra 3 months grace onto the original payment date.
So, am I eligible or is there some undetected small print somewhere?
The good news is there is no small print. All UK businesses are eligible.
How do I apply to increase my payment deadlines?
This is about as easy as it gets and is an automatic offer with no applications required.
Quite simply all businesses will not need to make a VAT payment until the dates stated above and all UK taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.
VAT refunds and reclaims will be paid by the government as normal.
Hang on, I’m already set up to pay via direct debit. What do I do?
Customers who pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do this ASAP to give your bank sufficient time to cancel off any arrangements before the funds get taken by HMRC! We know the phone lines to banks are especially busy right now, but you can access your direct debits online on through your banking app and cancel the direct debits yourself if you don’t want to wait on hold.
So lets talk Income Tax
For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.
Am I eligible for this?
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so as there is no point in delaying the payment unless necessary.
I’d definitely like to defer. How do I apply?
Again, this is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until January 2021. If you can’t afford to pay until January 2021, the option is there.
HMRC have also now scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-1.
If you have any questions or queries about the above information please don’t hesitate to get in touch with Advanced Accountancy on 01384 271858 or email us at email@example.com. We are here to guide you through this complicated and worrying time.
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