VAT and Income tax Deferral announced

VAT

A payment deferral applies from 20 March 2020 to 30 June 2020.

This is a deferral of tax and not an exemption: effectively, this is a fast way to provide business with emergency funding. Please in the meantime continue to file your VAT return as normal.

  • This is an automatic offer with no applications required.
  • Businesses will not need to make a VAT payment during this period.
  • Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. (31st March 2021)
  • VAT refunds and reclaims will be paid by the government as normal.

The VAT deferral will apply from 20 March 2020 until 30 June 2020.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.

The government has announced a three-month deferral for VAT payments until end June for all UK businesses with HMRC working all hours to thrash out the detail.

 

Update; 26th March 2020:

This will generally mean the deferral of one quarter’s VAT: the payment due on 7 April, 7 May or 7 June 2020 or the monthly payments due on each of these dates. This is an automatic offer and no application is required. Businesses will not need to make a VAT payment during this period.

HMRC has confirmed that businesses will need to cancel their direct debits. Businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel that mandate. This needs to be done before the direct debit is due to be collected. We cannot re-setup DirectDebit’s on behalf of clients.

Taxpayers have until the end of the 2020/21 tax year to pay any liabilities that accumulate during the deferral period. VAT refunds and reclaims will be paid by the government as normal. Businesses will also need to remember to reinstate their direct debit mandate once the deferral is over and to make arrangements to pay the accumulated VAT by the end of the 2020/21 tax year.

Businesses should continue to file their VAT returns by the due date.

Income Tax

The self employed may defer payment of their self assessment payments on account due on the 31 July 2020.

  • Payment will be deferred until the 31 January 2021.
  • This is an automatic offer with no applications required.
  • No penalties or interest for late payment will be charged in the deferral period.

You can still make a claim to reduce this payment on account you would have otherwise been paying on the 31st July 2020 under the normal circumstances. This will now simply reduce the deferred payment.