It has been a tough year for UK businesses, and with so many support packages available, it can be quite daunting to know where to start, what options are beneficial and what will ultimately protect your finances both personally and for your business. 
 
An item, in particular, that has caused much confusion is self-assessment tax. 
Early in the COVID-19 pandemic, Rishi Sunak announced that the self-assessment tax payments for July could be deferred interest-free and added to the 31 January 2021 payment. 
The deferral was automatically allocated to your HMRC account; however, you could of course, still pay your July payment on time should you wish. 
 
This, along with other government measures helped reduce the financial stress being caused by the previous 3-month lockdown. It is important to remember that the deferred amount will now become due at the same time as your January 2021 self-assessment tax liability resulting in a larger tax liability in January 21 than usual. 

 Can I pay the deferred liability now? 

To avoid the increased costs in January, you can still pay your tax bill now as you normally would. 
In fact, HMRC encourages businesses and the self-employed to behave as 'good citizens' and pay the tax they owe on time thereby helping the Government. In so doing, they also believe you could be helping yourself in the long-term. 
 
You can make your payment on account in part or in full any time between now and 31 January 2021 using the HMRC online service, there will be no interest or penalty as long as you pay in full by 31/01/2021. 

 What If I do not pay the deferred liability? 

On the 31/01/2021, the deferred tax bill from July 2020 and the new January 2021 bill will both be due for payment. 
 
The arrival of 2 Tax bills might present unexpected cash flow challenges in the new year at a time when your practice is in recovery and making up for that lost trade. 

What if I cannot afford 2 Tax bills? 

 
If paying your tax bill is a stretch or strain on your cash flow, you can look at finance options that not only keep your HMRC account up to date but also allows you to preserve your cash flow and spread the cost over a structured “affordable” period to suit your business. 
 
Another option is to discuss your situation with the HMRC and see if you might be eligible for a “Time to pay arrangement”. If you owe up to £30k, you can do this online without having to contact HMRC directly. 
In any case, it is vital to ensure that your return is filed on time to avoid any late payment penalties. 

We can help you… 

Here at Performance Finance, we offer unsecured loan facilities which allow you to spread the cost of tax liabilities flexibly to suit your requirements. 
 
We also offer retrospective tax funding at any point throughout the year, if you need to refresh your bank balance, this could be a great solution for any payments made to the HMRC where replenished funds would be attractive especially if business levels are not as strong as expected. 
 
Highly competitive and fixed rates, specifically to suit the requirements of professional individuals, our unsecured loans ensure that you can get the funding you need without putting your possessions at risk. 
 
Whatever tax may be due in January, it is important to have your business accounts that end in the 2019/20 tax year prepared as soon as possible so that you have early visibility of your January 2021 tax liability and can plan accordingly. 
In a world that has become increasingly unpredictable, gaining better predictability over your monthly expenditure will help enable you to navigate current and future challenges with a clear perspective and peace of mind. 
 
We are experts in professional funding and will always offer flexible funding solutions for you and your circumstances. 
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