One in four self-employed workers to delay their tax bill as coronavirus hits finances, Which? reveals

One in four self-employed workers plan to delay their tax bill for 2019-20, Which? has found, with many taxpayers struggling financially as a result of the pandemic.

With the 31 January tax return and payment deadline looming, Which? surveyed 4,000 people to investigate the nation’s tax return habits and found that some are unsure how they are going to pay their upcoming tax bill.

The consumer champion found a quarter (25%) of those who complete tax returns are hoping to delay the payment due on 31 January, while one in five (22%) said they had already deferred July 2020’s tax payment.

Worryingly, one in six (16%) taxpayers told Which? they either did not know how they planned to settle their tax bill or had not thought about it yet.

Two in five (42%) people said they had deferred their July payment as they could not afford to pay the tax.

To help with this problem, the government has temporarily altered the eligibility criteria for its Time to Pay scheme for taxpayers financially impacted by the pandemic.

This scheme will allow people to pay their bills across the 2021 calendar year in monthly installments, but interest will be charged on the outstanding balance. This differs from the July 2020 payment on account deferral, where self-employed taxpayers were able to put off paying the tax owed until 31 January 2021.

When Which? asked how people plan to pay for the tax owed during the 2019-20 tax year, one in seven (13%) people said they hoped to use the Time to Pay scheme.

One in seven (14%) people said they would have to dip into their savings to pay their tax liability, while two in five (42%) said they had already budgeted for the expense.

The same survey revealed that Britons will rack up 19 million hours filling in their tax returns this year and found worrying gaps in people’s tax knowledge.

To help people navigate the often lengthy, confusing process of filing a tax return, Which?’s easy-to-use and jargon-free online tax calculator offers personalised tax tips and helps simplify the process. This system allows for returns to be submitted directly to HMRC.

Which? is encouraging people to prepare early to avoid the penalties for missing the deadline.

Failing to pay your tax bill by 31 January and not having alternative payment in place could land people with hefty fines, which mount over time. You’ll be charged 2.6 per cent interest from the date the payment was due.

After 30 days, a charge equal to five per cent of the outstanding tax will be added to your bill. Following six months (31 July), another five per cent charge will be added. An additional five per cent charge will be added to your tax total after 12 months.

Jenny Ross, Which? Money Editor, said:

“The coronavirus crisis continues to have a devastating effect on many people’s finances, so it’s no surprise that more taxpayers than usual may be struggling to find the money to pay their tax bill.

“If you are planning to apply for HMRC’s Time to Pay scheme you must have filed your tax return.

“To avoid a late submission and a hefty fine, take time to brush up on the basics, and consider using online tools that will help to demystify the jargon and reduce stress.”

Notes to editors:

The Which? tax calculator can be found here: Fees apply; £10 for Which? members and £46 for non-members.

Which? surveyed 4,000 UK adults between 13th and 19th October 2020. Fieldwork was carried out online by Opinium and data have been weighted to be representative of the UK population (aged 18+).

To be eligible to apply to the Time to Pay scheme, you must:

  • owe less than £30,000 in tax
  • be signed up to and have a Government Gateway ID
  • have filed your 2019-20 tax return and know how much tax you owe
  • not have any other outstanding tax returns or owe other money to HMRC.

If you owe more than £30,000 or know you’ll likely need more than 12 months to pay the tax you owe, you might be able to arrange a different installment plan. You can discuss your options with the Payment Support Service on 0300 200 3835.

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

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