Struggling to pay your Self Assessment tax bill on time? Don’t worry, you’re not alone. There are few steps you can take to make payment arrangements with HMRC, before or after the deadline.
As a self employed or s small business owner, it’s not uncommon to face difficulties in paying your Self Assessment tax bill on time. However, there’s no need to panic. In this guide, we’ll outline the simple steps you can take to avoid penalties and interest charges by setting up a payment arrangement with HMRC.
Before the Deadline
If you know in advance that you won’t be able to pay your tax bill by the deadline, contact HMRC to set up a Time To Pay arrangement. This allows you to negotiate affordable monthly payments based on your income and expenses. Keep in mind that paying late may incur interest and penalties, which can also be included in the arrangement.
After the Deadline
If the deadline has passed, don’t panic. You can still set up a payment plan within 60 days after the payment deadline if you meet certain criteria:
You have filed your latest tax return.
You owe £30,000 or less.
You don’t have any other payment plans or debts with HMRC.
You plan to pay off your debt within the next 12 months.
Late filing or payment may result in penalties and accrued interest. However, HMRC can usually include these in your payment plan, so you won’t have to pay anything extra upfront. If you don’t meet the criteria or it’s been more than 60 days since your tax bill was due, contact the Self Assessment Payment Helpline.
How HMRC Calculates Your Payments?
The length and size of your Time to Pay arrangement depend on your financial circumstances. HMRC considers your income, expenditure, and monthly costs such as rent, food, and utility bills. Typically, they expect no more than 50% of your disposable income to be paid into the arrangement. For businesses, HMRC assesses what the business can afford to pay and may also consider savings or assets to reduce the amount owed.
Contact HMRC as soon as possible
Facing difficulties in paying your Self Assessment tax bill is not uncommon for small business owners. By proactively contacting HMRC and setting up a payment arrangement, you can avoid unnecessary penalties and interest charges. Remember, addressing these issues promptly is crucial to prevent escalation.
For more information on handling tax payment difficulties, visit TaxAid‘s website.