Tax Deadline Support: Essential Tips for Compliance

Recognize the Critical Need for Professional Help with Tax Deadlines

Recent studies indicate that a considerable 25% of self-employed individuals in the UK are now considering deferring their tax payments for the 2019-20 fiscal year. This trend stems from the immense financial strain triggered by the coronavirus pandemic, which has led to significant operational limitations for various businesses. A survey conducted by Which? involving 4,000 taxpayers underscores the urgent demand for personalized assistance regarding tax deadlines. These findings highlight the crucial need for effective strategies that can aid individuals in meeting their financial obligations during these unprecedented times.

As the critical deadline for submitting tax returns approaches on the 31st of January, which coincides with the payment due for the 2019-2020 tax year, the urgency has escalated. Alarmingly, nearly one in four self-employed taxpayers have already opted to postpone their payments, which are due in less than two weeks. The situation is further complicated by the fact that about 22% of these individuals had previously taken advantage of the government’s payment deferral option that was available until July 2020. Additionally, the survey projects that UK taxpayers will collectively spend approximately 19 million hours preparing their tax returns before the looming deadline, emphasizing the substantial burden they face.

Despite the impending deadline, a notable segment of taxpayers has yet to finalize their tax plans. Approximately 16% of taxpayers remain uncertain about their forthcoming steps or have not adequately considered their situation. Furthermore, over 42% have indicated that they have already chosen to defer their July payment due to ongoing financial challenges. This scenario illustrates the pervasive impact of economic difficulties on tax compliance and accentuates the need for accessible support services to assist those who require help navigating these challenges.

In response to these challenges, the UK government has introduced the Time To Pay scheme, which offers taxpayers the opportunity to spread their tax bill payments over the year in manageable monthly installments. This alternative provides a less daunting way to tackle tax liabilities; however, it’s essential to remember that interest will accumulate on any outstanding balance. Taxpayers experiencing difficulties in meeting their obligations should carefully consider this option to ensure they can effectively manage their financial responsibilities.

The Time To Pay scheme remains a viable option, unaffected by the pandemic’s repercussions, and should not be confused with the government’s earlier deferral option for payments due by July 2020. The latter was part of a broader initiative aimed at providing financial relief to self-employed individuals, allowing them to delay their payment obligations until the 31st of January 2021.

Understand the Significance of Timely Tax Payments to Avoid Heavy Financial Penalties

Missing the tax payment deadline of 31st January 2021 could result in severe financial consequences. Taxpayers are urged to proactively engage with HMRC to establish a feasible alternative, such as a Time To Pay agreement, to avoid incurring penalties. Delayed tax payments can lead to a hefty interest charge of 2.6% from the original payment due date. Additionally, a 5% penalty will be assessed on the outstanding tax after 30 days, followed by another 5% fee on 31st July 2021, and yet another 5% levy after one year of late payment. These financial repercussions underscore the critical importance of fulfilling tax obligations promptly to evade the accumulation of debts.

Essential Actions to Take If You Are Unable to Pay Your Tax Bill on Time

For individuals grappling with financial challenges that hinder their ability to meet tax obligations, the government has introduced several support mechanisms to assist. One potential route is to negotiate an agreement with HMRC through the Time To Pay scheme; however, there are specific eligibility criteria to be aware of:

• You must owe less than £30,000 in tax
• The arrangement should be initiated within 60 days of the payment deadline
• Your tax returns must be current and completed
• You should have no outstanding debts with HMRC
• You do not currently have any other payment plans or agreements with HMRC

If your tax debt exceeds £30,000 or you anticipate requiring more than the maximum allowed 12 months under the Time to Pay scheme, it is still possible to discuss alternative installment options with HMRC. The most crucial step, particularly if you are uncertain about your ability to meet your tax bill or need guidance on postponing your payment, is to contact the HMRC Payment Support Service at 0300 200 3835. Taking proactive steps can significantly help you navigate these challenging financial circumstances effectively.