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July tax deadline deferred to January

Practical Issues
wickham
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July tax deadline deferred to January

#322114

Postby wickham » June 27th, 2020, 6:30 pm

I got a letter from HMRC today informing me that because of the virus I don't have to pay the on account payment due by 31st July until 31st January 2021.

If I submit a tax return for 2019/20 within the next few months, the January payment normally includes the balance over the on account payments.

Does it mean that my January payment will be the July 2020 and January 2021 on account payments plus the balance from my tax return? That will be a lot. :o

Lootman
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Re: July tax deadline deferred to January

#322117

Postby Lootman » June 27th, 2020, 6:41 pm

Can i ask why you have to make "on account" payments at all? Is it because you run a business?

Or do you choose it as a way of spreading out payments over a year rather than paying it all with the return?

I usually submit my return in May or June of each year (although will be late this year for Covid-related reasons) and pay the lot then. Although of course I could hold off until the last minute and pay everything in January. I always owe because I have no tax withholding.

My accountant has never suggested making "on account" payments.
Last edited by Lootman on June 27th, 2020, 6:43 pm, edited 1 time in total.

wickham
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Re: July tax deadline deferred to January

#322118

Postby wickham » June 27th, 2020, 6:43 pm

Yes, but it makes budgeting essential, after Christmas spending, etc. So I may pay it before January, but I wasn't sure whether the January payment was also being deferred.

Lootman, I'm just a retired person with dividends and I make a self-assessment return every summer. HMRC has always asked for July and January on account payments.

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Re: July tax deadline deferred to January

#322120

Postby Lootman » June 27th, 2020, 6:45 pm

wickham wrote:I'm just a retired person with dividends and I make a self-assessment return every summer. HMRC has always asked for July and January on account payments.

Interesting because I am in a similar situation but HMRC have never asked for such payments. They seem happy with getting payment whenever I get around to submitting my return.

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Re: July tax deadline deferred to January

#322121

Postby wickham » June 27th, 2020, 6:49 pm

They would be happy as you pay with the return, I don't pay it then. I pay it by two on-account payments and the balance many months later. The on account payments are in advance, of course, but based on the previous year's return.

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Re: July tax deadline deferred to January

#322126

Postby scrumpyjack » June 27th, 2020, 6:57 pm

Both my wife and I always have to pay on account payments. This happens where your income does not suffer tax at the eventual rate at source (eg dividends and you are a higher rate tax payer). My wife has just had the statement showing the second on account payment for 19/20 payable in Jan 2021 instead of the usual July 2020. They do say you can pay it earlier if you like.

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Re: July tax deadline deferred to January

#322127

Postby Lootman » June 27th, 2020, 7:00 pm

wickham wrote:They would be happy as you pay with the return, I don't pay it then. I pay it by two on-account payments and the balance many months later. The on account payments are in advance, of course, but based on the previous year's return.

So aren't you lending HMRC money? Whereas they are lending me money?

Apologies if I am being thick here but I am just not familiar with the concept. For me tax is just a once-a-year thing.

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Re: July tax deadline deferred to January

#322129

Postby scrumpyjack » June 27th, 2020, 7:07 pm

Well not really. If you submit a return, say, for the 18/19 tax year and there is significant extra tax to pay on income (does not apply to CGT and has to be over £1,000 or so I think), in addition to demanding the tax for 18/19, payable by 31/1/20, they ask for two payments on account for the 19/20 tax year payable 31/1/20 and 31/7/20. So by the time you have to pay the first instalment you are 10 months into that tax year.

You can apply to reduce the payments on account if you think your income for that year will not be high enough to warrant it.

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Re: July tax deadline deferred to January

#322130

Postby PinkDalek » June 27th, 2020, 7:10 pm

Lootman wrote:
wickham wrote:I'm just a retired person with dividends and I make a self-assessment return every summer. HMRC has always asked for July and January on account payments.

Interesting because I am in a similar situation but HMRC have never asked for such payments. They seem happy with getting payment whenever I get around to submitting my return.


It would depend on the amount of Income Tax payable in prior years as to whether or not payments on account are in play.

https://www.gov.uk/understand-self-asse ... on-account

This explains the current options:

https://www.gov.uk/guidance/defer-your- ... s-covid-19

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Re: July tax deadline deferred to January

#322134

Postby Lootman » June 27th, 2020, 7:14 pm

scrumpyjack wrote:Well not really. If you submit a return, say, for the 18/19 tax year and there is significant extra tax to pay on income (does not apply to CGT and has to be over £1,000 or so I think), in addition to demanding the tax for 18/19, payable by 31/1/20, they ask for two payments on account for the 19/20 tax year payable 31/1/20 and 31/7/20. So by the time you have to pay the first instalment you are 10 months into that tax year.

You can apply to reduce the payments on account if you think your income for that year will not be high enough to warrant it.

OK, thanks. I won't worry about it since I feel sure my accountant would have told me if it was necessary. Or maybe the fact that I submit my return very soon after April 5th means it is not an issue. Most of my income is dividends and capital gains at the moment. I am retired but not yet drawing pensions.

Something for me to keep an eye on though.

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Re: July tax deadline deferred to January

#322139

Postby mc2fool » June 27th, 2020, 7:22 pm

Lootman wrote:
wickham wrote:They would be happy as you pay with the return, I don't pay it then. I pay it by two on-account payments and the balance many months later. The on account payments are in advance, of course, but based on the previous year's return.

So aren't you lending HMRC money? Whereas they are lending me money?

Apologies if I am being thick here but I am just not familiar with the concept. For me tax is just a once-a-year thing.

If you don't have any withholding (and your tax bill is over £1K) then I don't see how you are not paying on account.

"‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You have to make 2 payments on account every year unless:

. your last Self Assessment tax bill was less than £1,000
. you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.
:
If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.
" https://www.gov.uk/understand-self-assessment-bill/payments-on-account

Note "you have to". There are penalties if you don't. As you're paying once a year in May or June, i.e. before the July payment on account, I rather suspect your accountant is bundling that payment, the balancing payment and the following January's payment on account into the one payment (having already paid last January's payment on account last year).

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Re: July tax deadline deferred to January

#322140

Postby Lootman » June 27th, 2020, 7:28 pm

mc2fool wrote:Note "you have to". There are penalties if you don't. As you're paying once a year in May or June, i.e. before the July payment on account, I rather suspect your accountant is bundling that payment, the balancing payment and the following January's payment on account into the one payment (having already paid last January's payment on account last year).

Ah, that might be it, as my tax is definitely more than £1,000 a year!

I don't even have an online tax account (that I know of). My accountant takes care of everything, pays HMRC on my behalf and so on.

If so then it sounds like it won't matter if I do not submit taxes and pay as early this year, since the July payment is deferred until January 2021.

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Re: July tax deadline deferred to January

#322141

Postby PinkDalek » June 27th, 2020, 7:28 pm

scrumpyjack wrote:... My wife has just had the statement showing the second on account payment for 19/20 payable in Jan 2021 instead of the usual July 2020. They do say you can pay it earlier if you like.


My paper Self Assessment Statement is poorly worded. It includes:

Amount due by 31 Jan 21 £A in an emboldened box. I put a £sterling sign there but HMRC don’t appear to bother with such niceties.

31 Jan 21 2nd payment on account due for year 19/20 £A in the table.

No mention at all in the table that the £As would have been the normal payment on account due on or before 31 July 2020.

It is only in a separate narrative box that they state You can defer your July 2020 payment on account. Find out more ... but nowhere is it specifically stated what it is!

Not that I’m concerned as I know the position and mentioned it in a topic on here a little while back

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Re: July tax deadline deferred to January

#322144

Postby dealtn » June 27th, 2020, 7:36 pm

I have to pay on account, and not get the full benefit of waiting until the end of the tax year. In the past it has been quite small. Currently it is somewhat larger, but with interest rates so low it matters little except for managing the cash flow.

A couple of years I didn't pay it on time and wasn't censured or penalised (although it was a small sum). Last year I didn't have any employment income and so challenged the quoted pre-payment on account created from the previous year's tax return (which assumes things stay the same) and proposed a (much) smaller payment on account. This wasn't challenged (or even acknowledged). I'm not sure what would have happened this year with a (much) larger sum if I had been late, or only paid a reduced amount.

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Re: July tax deadline deferred to January

#322148

Postby mc2fool » June 27th, 2020, 7:42 pm

PinkDalek wrote:My paper Self Assessment Statement is poorly worded.

Actually I think the whole thing is poorly phrased ... as the balancing payment is due 31-Jan-21, "deferring" the July on account payment to that same date really means you just don't need to make that payment on account this year, just settle up everything by January. The use of "deferring" makes it sound like you have to make two separate payments by January.


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