Time to Pay – January 2021 Tax Liability

Those struggling to pay the tax becoming due on 31 January 2021 have been granted further time to pay as part of the winter economy package announced on 24 September.

HMRC has increased the threshold for paying tax liabilities by instalments to £30,000 from the previous limit of £10,000.

If you want to take advantage of this, after filing the 2019-20 tax return you can use the online self-serve time-to-pay facilitythrough GOV.UK to set up a direct debit and pay the tax in monthly instalments, up to a 12-month period.

To qualify you must meet the following conditions:

  • You must have no outstanding tax returns, no other tax debts or no other HMRC payment plans set up
  • The debt must be no higher than £30,000
  • The payment plan needs to be set up no later than 60 days after the due date of a debt

Unlike the deferred July 2020 payment to January 2021, interest will be charged on the tax outstanding from 1 February 2021.

If you have a liability of more than £30,000, or if you need longer than 12 months to pay, you may be able to set up a time-to-pay arrangement by calling the self-assessment payment helpline on 0300 200 3822.