Anyone who has difficulty paying their second 2019/20 Self Assessment payment on account as a result of the coronavirus pandemic can take advantage of automatically deferring the payment until 31 January 2021, HMRC is reminding taxpayers. 

Payments on account include Income Tax and Class 4 National Insurance Contributions where applicable.

The second Self Assessment payment on account for 2019-20 is ordinarily due at the end of July, but the government previously announced it is supporting the self-employed and others by allowing them to defer this payment.

This option to defer is on top of additional support for the self-employed through £7.8billion in grants paid through the Self Employment Income Support Scheme. 

The payment on account deferral will give immediate support to businesses and individuals by keeping cash at their disposal during this extraordinary time of uncertainty. 

To make this as hassle free as possible customers will not need to contact HMRC to defer their payment on account – you opt into the deferral by simply not paying the tax bill due by 31 July 2020. 

If no payment is received, HMRC will automatically update its systems to show payment has been deferred and no interest or penalties will be incurred, providing it is paid in full by 31 January 2021. The only action customers may need to take is to cancel their direct debit if they have one set up for their payments on account. 

There are 2.7million taxpayers eligible for deferral, 1.3million of them self-employed. A projected estimate based on 2019-20 Self Assessment receipts suggests that the July payment deferral will provide up to cash flow boost to taxpayers of £11.8billion.   

Self Assessment taxpayers should think carefully about whether deferral is right for them. It’s important to remember that the deferred amount will be due on 31 January 2021, the same date that any 2019/20 balancing payment and first 2020/21 payment on account will be due. This could mean three separate payments are due all at once.

They may wish to contact HMRC about paying these combined amounts in installments if they have difficulty in paying them in full all at once.  

Payments on account are payable by Self Assessment taxpayers by 31 January and 31 July each year, unless: 

• their last Self Assessment tax bill was less than £1,000 
• they have already paid more than 80% of all the tax they owe at source, for example through their tax code. 

Each payment on account is estimated. It is based on 50% of the previous year’s Self-Assessment tax bill. They are advance payments towards the current year’s tax bill. 

For HMRC guidance on deferring your Self Assessment payment on account click here.