Paying HMRC in instalments

Date posted: 7th Dec 2020

HMRC have announced that any taxes due in January 2021, can be spread over a number of months, if the taxpayer elects to do so.

Any liabilities of less than £30,000 will be agreed automatically by HMRC, assuming that you do not have any other debts owed to HMRC, your tax returns are up to date and it is not more than 60 days after the payment deadline. However, any liabilities over £30,000 will need approval from HMRC by calling the Self Assessment payment helpline.

Further details are available on the HMRC website.

Importantly, you must have completed and filed your 2019/20 tax return with HMRC, before they can agree to the instalment arrangement. If you have not already sent your tax return information to us, we would recommend that you do so, sooner rather than later, to ensure that any instalment arrangement can be agreed in good time.

We are aware that some clients are facing difficulties in agreeing payment plans in relation to:

  • Automatic processing – despite owing less than £30,000, the HMRC system suggests that they are not eligible for an automatic payment plan. They then have to call HMRC to arrange a plan.
  • Spreading period – despite HMRC suggesting that the taxpayer can spread the payment over a 12 month period, they are being forced to accept a shorter period when they speak to HMRC.
  • Upfront payment – despite HMRC suggesting the entire January 2021 balance can be spread, HMRC are asking for an upfront payment immediately (before the debt is legally due) and that either the taxpayer has to clear the balance due for 2019/20 or pay a significant lump sum towards the January 2021 payment.

We would recommend that you point the HMRC adviser in the direction of their own website before committing to instalment payments that mean that your personal cashflow is unmanageable and could result in defaulting.

As ever, our tax team are available to help. Please contact the team here.


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