Many are facing higher tax bills this year as deferred bills from last year are beginning to catch up, this has resulted in taxpayers accumulating £4bn in debt with HMRC.
The coronavirus pandemic has had a lasting effect on the UK economy, with many people out of work and businesses being forced to temporarily close. This has led to uncertainty for many people, who now fear they will be hit with a penalty as they struggle to make a payment for the 31st January 2021, self-assessment tax return deadline.
As many people are struggling throughout the pandemic, some have resorted to using savings or taking money out of their pension pot, in order to pay their tax bills. This has delayed retirements and potentially put homes on the line.
HMRC’s Time To Pay payment plans are designed for those who cannot pay their tax bills on time. The scheme allows for people to spread their payments over a period of time. Almost 650,000 people opted into the scheme by the end of June 2020, with the average debt per person, totalling £6,400. Since October, a further 25,000 people applied for help to pay £69m in unaffordable tax bills.
Those taxpayers who have previously filed tax returns late or received penalties will not be eligible to spread their payments and will be fined if they do not meet the deadline.
HMRC is encouraging anyone who is having difficulty making a payment, to get in touch or apply for a payment plan online. Fines will only be waived for those with a reasonable excuse, directly related to the coronavirus pandemic.