In the UK, genuinely deferring tax payments is generally only possible under specific circumstances, usually when you are facing temporary financial difficulties that prevent you from paying on time. It’s not a standard option available to everyone without a valid reason.
Here’s what you need to know about potentially deferring tax payments in the UK:
Standard Payment Deadlines: It’s crucial to be aware of the standard deadlines for tax payments (e.g., 31st January and 31st July for Self Assessment payments on account, 31st January for the balancing payment). Missing these deadlines without prior arrangement with HMRC will automatically incur penalties and interest.
Contact HMRC Immediately: If you anticipate or are experiencing difficulties in paying your tax bill by the deadline, the most important step is to contact HMRC as soon as possible. Do not wait until after the deadline has passed.
Explain Your Situation: When you contact HMRC, you will need to explain your financial situation and why you cannot pay the full amount owed by the deadline. They will assess your circumstances.
Time to Pay Arrangement: The primary mechanism HMRC offers for taxpayers struggling to pay is called a “Time to Pay” arrangement. This is an agreement with HMRC to pay your tax bill in instalments over a set period.
- Eligibility depends on your circumstances.
- You usually need to owe £30,000 or less and apply online, or owe more or need longer and apply by phone.
- Interest will be charged on the outstanding amount from the original payment deadline until it’s paid in full, even if you have a Time to Pay arrangement.
- Penalties may still apply if you contacted HMRC after the payment deadline, but early contact might help mitigate them.
Not a Right, but an Agreement: A Time to Pay arrangement is not an automatic right; it’s an agreement negotiated with HMRC based on your ability to pay. They will expect you to pay as much as you can upfront and demonstrate that the proposed payment plan is affordable.
Consequences of Not Paying/Contacting: If you simply do not pay your tax bill by the deadline and do not contact HMRC to arrange a payment plan, you will face automatic penalties and interest charges, which will increase over time. HMRC can take further action to collect the debt.
In summary: You cannot generally just decide to “defer” your tax payments. The correct process if you are struggling to pay is to contact HMRC before the deadline and try to arrange a “Time to Pay” agreement based on your financial circumstances.
Strong Recommendation: Tax matters can be complex. If you are unsure about your tax obligations or are having difficulty paying, it is highly advisable to:
- Visit the official HMRC website for the most accurate and up-to-date information.
- Contact HMRC directly to discuss your situation.
- Seek professional advice from a qualified accountant or tax advisor who can assess your specific circumstances and advise on the best course of action.
