Self Employment payment plan
With Covid starting to impact our trade last year, HMRC had announced a number of measures to help us with our cashflow. One of these being an automatic deferral of our ‘Payment on Account’, which was due on July 2020.
What this meant is that our liability for this Self-Assessment is going to be a lot more than what are used to seeing.
The liability will be a cumulative of:
- the July 20 deferred second payment on account;
- balancing payment for 19/20;
- first payment on account for 20/21 (this is calculated as half of your total 19/20 liability);
- any capital gains tax for 2019/20; and
- class 2 and 4 National Insurance Contributions for 19/20.
With the pandemic still upon us, HMRC realise that many self-employed like us locum Optometrists and Dispensing Opticians are still facing a reduce in trade and hence a hit to our pockets.
It is therefore they have allowed for a spread of the liability over the course of the next 12 months. This can only be done given you meet the all of the following conditions:
- You must agree to pay the liability monthly by direct debit;
- You must have submitted your 19/20 self-assessment tax return;
- You must have prior tax returns outstanding;
- Your tax liability should be no more than £30,000; and
- You should have no other tax instalment agreements in place.
It normally takes HMRC up to 72 hours to fully acknowledge and process your tax return. What this means is that if you are one to leave your filing to the very last minute then you might find that you are not being offered the payment plan as HMRC has not yet processed your 19/20 return.
Things to consider
- You can choose the number of instalments that you would like to spread your liability over in 2021.
- If you miss any of these payment plans, then and unpaid tax will accrue interest at 2.6% until paid.
- You must have your instalment plan set up within 60 days after the due date for the tax (31 Jan 2021). If a payment plan is not in place and you have not paid your 19/20 liability, then an automatic penalty is imposed at 5% of the outstanding tax.
Locumkit Covid 19 offer only for Opticans: Self Assessments from £225 and Limited Company Accounting from £540
What is Locumkit?
Locumkit - Bespoke locum management platform for locum Optometrists and Dispensing Opticians (Locum Agency & Accountants); we help you get locum days, maintain your income/expenses, send invoices (all on the cloud), file your accounts - all from one place.
Specialist Accountants for locums - to find out more click here