COVID-19: VAT and Self-Assessment Payment Deferral

VAT and Self-Assessment Payment Deferral

During the coronavirus pandemic, the UK Government is helping companies by deferring VAT and self-assessment payments. Temporary amendments to the VAT payments are expected to help companies handle their cash flow between 20 March 2020 and 30 June 2020. The HMRC does not charge interest or fines in respect of any amount deferred as a result of the announcement by the Chancellor.

In this article:

How does VAT deferment affect account payments?
Deferred VAT payments
Deferred Income Tax 

How Does VAT Deferment Affect Account Payments?

If you delay payment on the account between 20th March 2020 and 30th June 2020 but the balance payment is beyond those dates, the amount you have to pay is the current payment minus any deferred payments. Paying deferrals do not produce a repayment.

Deferred VAT Payments

If you want to defer your VAT payment, you have to pay the VAT due on or before March 31, 2021. All UK companies are liable but VAT MOSS payments are not protected by the deferral. HMRC has now verified that this covers non-established VAT registered businesses in the UK. Businesses with a direct debit mandate in place to pay VAT and wanting to delay payment will need to contact their bank to cancel the mandate. This needs to be done before the collection of the direct debit is due.

Deferred Income Tax 

Payments due on 31 July 2020 can be delayed until 31 January 2021 for the Income Tax Self-Assessment. You are eligible if you are due on 31 July to make your second account ego-assessment bill. You don’t have to be a self-employed individual to apply for the deferment. The deferral is optional, some taxpayers will choose to make the payment to prevent making a larger payment in January 2021. Self- assessment returns will also be filed by their due date, so it could be beneficial to file the return for 2019/20 as early as possible after 5 April 2020. It will encourage the preparation of the tax payment due in January 2021 and would crystallize any due refund, including any possible loss relief.

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