Struggling to cover your tax obligations? Seeking assistance from HMRC? Check out their aid options.
Struggling with your tax return due date? No worries! If you've yet to file your tax return and the deadline of 31st January is looming, don't panic. You might be eligible for HMRC's Time to Pay plan, which allows you to pay your tax bill in installments.
Over 3 million people are in the same boat, and if you don't complete your tax return and pay up before the deadline, you might face a fine. But, a government scheme can help you avoid that.
What is Time to Pay?
Time to Pay is a plan that gives you the flexibility to pay your tax return bill in multiple installments if you cannot pay it in full on time. To avail of this service, you'll need to get in touch with HMRC as soon as possible.
Although Time to Pay includes an interest charge, it's often cheaper than an HMRC fine. The fine starts at £100 but increases each month until you pay, making it essential to consider applying for Time to Pay if you're unable to pay the full amount on time.
How to Apply for Time to Pay Plan and Who can Get it?
Applying for Time to Pay is straightforward. You can apply online on gov.uk using your Government Gateway account. To set up the payment plan, you'll need your unique tax reference number and your bank details that can be used for direct debit payments.
However, there are some eligibility criteria to consider:
- Your bill must not exceed £30,000.
- You should be within 60 days of the payment deadline of 31st January.
- Your business should be up to date with all tax returns.
- You should not have any other outstanding debt with HMRC.
HMRC may also deny the plan if they believe you won't be able to keep up with the repayments. You'll need to provide details about your income, spending, and savings or investments to establish a suitable repayment plan.
In some cases, HMRC might ask you to use your savings or investments to help pay your tax bill. The repayment plan typically lasts 12 months.
Late Payment Penalty Fees
If you fail to pay by midnight 31st January 2025, you'll face penalties. The initial fine for missing the 31st January deadline to file and pay your return is £100. After three months, a daily penalty of £10 per day for 90 days applies, plus the original fine. After six months, the fine increases to £300 (or 5% of the tax due, whichever is higher). After 12 months, another £300 (or 5% of the tax due if it is higher) is added.
The repayment interest rate is 3.75%, while the late payment interest rate is 7.25%. Keep these rates in mind when planning your repayments to avoid accumulating unnecessary debt.
Using a Credit Card to Pay Your Tax Bill
It's important to note that you cannot use a personal credit card to pay your tax bill. Stick to the repayment plan to avoid penalties and interest charges.
By understanding the Time to Pay scheme and following the necessary steps, you can manage your tax bill and avoid the inconvenience of penalties. Good luck with your tax return!
If you find yourself unable to pay your tax return in full by the deadline of 31st January, consider applying for the Time to Pay plan offered by HMRC. This scheme allows you to pay your tax bill in multiple installments, which can help manage your personal-finance situation and potentially save you from facing a fine or late penalty fees. To apply, you can use your Government Gateway account on gov.uk and provide your unique tax reference number and bank details for direct debit payments.
