Coronavirus, Covid-19

Deferring VAT and Income Tax Payments

Information last updated: 11:00, 26 March 2020

Deferring VAT and Income Tax payments

To help support businesses further during the coronavirus pandemic, the Government have agreed to defer Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, your Income Tax payment due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

The deferral of VAT payments will apply from 20 March 2020 until 30 June 2020. If your business is UK VAT registered, you are eligible. The VAT period that will be the deferral of one quarter's VAT bill and will effect payments due on 7 April, 7 May or 7 June or if you pay monthly, the bill due on each of these dates.

Eligibility

All UK businesses are eligible.

How to access the scheme

As this is an automatic offer, there is no application process to go through. Businesses will not need to make a VAT payment during this period and may wish to cancel their Direct Debit to prevent payment from being taken. 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.

Income Tax

If your self-employed, your Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Eligibility

Eligibility for Income Tax deferral is limited to those who are self-employed. Income Tax deferral does not apply if you complete a self assessment but are not self-employed.

How to access the scheme

As this is an automatic offer, no application is required. HMRC have also confirmed that no penalties or interest for late payment will be charged during the deferral period.

Because the system requires a separate Direct Debit mandate to set up for each individual payment, very few taxpayers pay their self assessment by Direct Debit. However, should you qualify for Income Tax deferral and already have a Direct Debit payment scheduled on account due out on 31 July 2020, you should consider cancelling it.

Self assessment returns should still be filed by their due date and it may be advantageous to file the 2019/20 return as soon as possible after 5 April 2020.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

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