July will be with us in a few weeks and that usually means tax bills for many of us. It’s always a scramble to make sure that you have the money to pay the tax due at the end of July, in effect the second payment on account for 2020/21 tax year, and it’s usually important that it is paid on time because late payment incurs all sorts of penalties.
This year, however, you don’t need to pay your tax bill at the end of July. The Government has said that these bills can be deferred until the end of January next year because it recognises that many people are struggling and need what money they have to pay bills and to buy food rather than in paying it all to HMRC.
But it’s only a deferral, not a waiver, so any money that you don’t pay in July will have to be paid when the next tax bill is due at the end of January next year. And it begs the question that if you don’t have money to pay your tax at the end of July this year, where are you going to suddenly find it in January next year, when you will have January’s liability to pay as well, effectively double.
So if you have the money to pay July’s tax bill this year you should probably pay it, rather than building up a potential problem for the start of next year.
It’s also important to make sure that your tax affairs are up to date so that you can work out your liability for next January as soon as you can, and as accurately as you can, because that will give you a better idea of the best way to deal with the total due for this year and next year.
At this stage there is no indication of the way HMRC will deal with requests for people to have more time to pay bills next year, or whether the current deferral scheme will be extended so we have to assume the worst.