Coronavirus Tax Deferral
Updated 20 May 2020
There's no doubt that COVID-19 has taken the world by storm and turned it on its proverbial head. Unemployment and sickness lead the daily news. Businesses are closed and feeling the impact of the coronavirus.
Businesses and individuals alike are looking to the government for assistance through these hard economic times. Businesses are seeking bounce back loans and taking advantage of VAT tax deferrals offered by the HMRC.
Are you wondering what tax deferral options are available for your business and how to take advantage of them? Read on to learn what you need to know about the VAT tax payment deferral.
What Is the Tax Deferral?
A VAT tax deferral allows businesses and some individuals to defer their scheduled tax payments.
You opt to defer quarterly and monthly VAT returns' payments. These are the periods that end in February, March and April. Any payment due between 20 March 2020 and 30 June 2020 can either be paid as planned or deferred to a later date.
Additionally, if you have annual accounting advance payments due between 20 March 2020 and 30 June 2020 these can also be deferred.
It should be noted that the VAT MOSS or import VAT do not qualify for a deferral.
Who Is Eligible to Take Advantage of the Tax Deferral?
Eligibility for the VAT deferral is open to businesses, certain individuals. Of particular interest is that it has been opened up to the self-employed sector too.
How Can a Business Take Advantage of the Tax Deferral?
Businesses don't need to notify anyone if they wish to take advantage of the tax deferral. They can choose to not make the payment if it falls inside the dates of 20 March 2020 and 30 June 2020.
A business should note that if a tax deferral is used, the repayment of those taxes is due again by 31 March 2021. Income tax payments due on 30 July 2020 can also automatically deferred and individuals have until 31 January 2021 to make the repayment.
Neither businesses or individuals need to notify HMRC that they wish to take advantage of the plan.
It should also be noted that there will not be additional fees or penalties on any deferrals you choose to make during this period of time.
One important thing to note regarding the automatic withdrawal of payments. Those will continue to process as scheduled. If you or your business wish to take advantage of the tax deferral, then it's imperative that you cancel the automatic payment from your bank right away. You can always reset those up once you are past the deferral period.
Tax Deferral Options During Covid-19
COVID-19 has had a devastating effect on the health and welfare of individuals and businesses all around the UK and the world. Don't be afraid to take advantage of the tax deferral during these trying times to help your business in this time of need.
For more business and tax advice during these tough financial times, we are here to help.
Contact us today with any of your business tax questions.
How KG Accountants can help
- Help and assist you to fully comply with the government guidelines on managing the risk of Covid19.
- Forecasting – both for your own planning and for the business loan applications.
- Help prepare simple cash flow monitoring tool to ensure your road to recovery is as smooth as possible.
- How to set up a payment plan with HMRC.
- Businesses who have negotiated a rent holiday.
- Our regular blog on how you can get funding during this pandemic.
- Everything you need to know on the Coronavirus Job Retention Scheme (CJRS) and furloughing.
- Managing your personal finances – our financial planning team’s top tips.
- If there’s anything else you need help with not listed above, please ask, and we’ll find a way.
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