In an ideal world, you’d always put enough money aside to cover your tax bill each year. That way, when the time comes to file your Self Assessment tax return and pay what you owe, there’s no stress or panic. But many of us don’t operate in an ideal world, and sometimes things can go wrong. You might not be able to put enough money away, or you might find yourself in financial difficulty for one reason or another. In those cases, it can be a real struggle to pay your Self Assessment tax bill.
As we reported in January and February 2021, HMRC has been easing struggling to pay my VAT the pressure on people who are struggling to pay their tax bills. They announced then that people who file their Self Assessment returns and pay what they owe by the deadline of 31 January will not incur an immediate 5% late penalty. This is a welcome relief for those who are finding it difficult to pay their tax bill, especially at this difficult time of the year.
But it’s important to remember that the 5% penalty is only waived until 28 February 2022, and that a 5% late charge will apply again from this date. In the meantime, if you are struggling to pay your tax bill, we recommend that you contact HMRC’s income tax helpline as soon as possible. They can advise you on how to proceed and may be able to offer a suitable Time to Pay arrangement that reflects your current financial situation.
Aside from setting up a Direct Debit, there are other ways to make your HMRC tax payments. This includes paying by the Faster Payment and Chaps services, online or telephone banking, business credit card and cheque. The latter can take up to three days to arrive if there are postal delays, so it’s worth thinking ahead when you decide to pay your tax bill.
Another important consideration is whether you’ve claimed the right allowances and reliefs for your expenses. For example, you should be claiming any donations made to registered charities and community amateur sports clubs (CASCs) that you’ve made during the year, as they are tax-free. You can also claim the value of any capital goods that you’ve purchased, such as computers and expensive software.
If you’re struggling to pay your Self Assessment tax bill, then it’s important that you seek advice from an accountant as soon as possible. This can help you avoid any further interest and penalties, and even a possible debt recovery action by HMRC. You might be able to agree a Time to Pay arrangement with HMRC, so that you can spread the cost of your outstanding taxes over an agreed period of time. If you can’t afford to pay your tax bill in full straight away, then FreeAgent can give you a real-time overview of your whole tax position so that you never miss a payment again. Try it free today.