Individuals who pay certain levels of income tax and national insurance via self-assessment must make payments on account towards their tax liability in January and July each year. The Chancellor has announced that the next instalment, due by 31 July 2020 will now be deferred until 31 January 2021. This should give affected individuals an extra six months to pay roughly half of their tax liability for the 2019/20 tax year.
HMRC will not charge late payment interest on the July instalment during this time.
HMRC are yet to release any guidance on this policy but we expect the easiest thing to do would be to cancel all July payments, and not require individuals to contact HMRC to ask to defer the payment.
The end of the tax year is just around the corner and the self-employed should complete their 2019/20 tax returns as soon as they are able to. This will not only provide an accurate figure to pay in January 2021, but also allow anyone that overpaid their January 2020 instalment to claim a repayment.