Are you facing cash flow difficulties? Buy-to-let landlords suffering hardship as a consequence of the coronavirus pandemic can defer their July tax payment on account.
Research shows that not all self-assessment tax-paying landlords are aware that HM Revenue and Customs (HMRC) has updated its guidance enabling people to benefit from an extension to the July payment date.
Consequently, anyone who is due to submit a self-assessment income tax payment on July 31, including those with rental and investment income, now has until January 31, 2021 to make this payment.
According to the guidance, this deferment is optional and anyone who is still able to pay their second self-assessment payment by the July deadline are being urged to do so.
No penalties or interest for late payment will be charged in the deferral period.
Fiona Fernie, a tax dispute resolution partner at Blick Rothenberg, said: “It is important for taxpayers to think now about the likely level of their income this year and what the tax is they are going to have to fund in January and if they conclude that they will not be pay because of lack of income due to Covid-19 they should let HMRC know immediately.”
She added: “HMRC have said that July tax payments for anyone who pays be self-assessment can be delayed until January but if they have the money, I would urge them to pay now so that they are not faced with a double bill.”
Many taxpayers will still be worried that even if they pay now, they may not be able to pay what they owe in January. But if you are in this position, simply alert HMRC now so that they will be able to get a pay arrangement.
According to Fernie, HMRC will be sympathetic to what has happened to people’s finances but the earlier they are told the better it will be for both parties.
She added: “Understandably most people are primarily thinking about how to pay the mortgage and put food on the table, but it is important to remember that the postponement of the 31 July 2020 payment on account merely delays the liability; it does not wipe it out.
“Taxpayers will still have the problem of how they fund their tax bills in January 2021, potentially before they have seen a full recovery of their business.
“It is vital that they think now about how they will cope so that if necessary, they can approach HMRC for a Time to Pay (TTP) arrangement before they face an imminent deadline.”
Fernie added: “If they do not do this it could be difficult in January and HMRC will not be so sympathetic and could launch inquiries which will be time consuming for HMRC and stressful for the taxpayer. All that is required is a sensible piece of housekeeping.”