Many people will face some very big tax bills in January 2021 as the balance of income tax due for 2019-20 on profits earned before the pandemic is due for payment. The income tax payable by 31 July 2020 was automatically deferred to 31 January 2021, which makes the January 2021 bill even bigger. Any capital gains tax for 2019-20 is also payable by the same date.

If you will struggle to pay your tax due in January you can apply for ‘time to pay’ to spread the balance over 12 monthly instalments. You can apply online in advance or within 60 days of the tax becoming due. Your request for ‘time to pay’ should be granted automatically if you do not have other debts and the amount you owe is no more than £30,000.

If you need a longer payment schedule or your debt is larger than £30,000, you can arrange a bespoke agreement with HMRC through the self assessment payment helpline: 0300 200 3822.

The VAT payable in the period from 20 March to 30 June 2020 was also automatically deferred to 31 March 2021. You can settle this debt in part or in full before 31 March 2021 but if the VAT due is still outstanding by that date you will be able to opt into a new payment scheme to pay off the debt over 11 instalments.

You will be charged interest on the outstanding tax from the date it was deferred until it is paid in full.

Last updated: April 29th 2021.