Deferral of VAT and Income Tax, and Reliefs for Rates (updated 2 November)

VAT payments for all UK businesses deferred for 3 months but now ended.

The government has automatically deferred business payments for Valued Added Tax (VAT).
The deferral applies from 20 March 2020 until 30 June 2020.

  • Please note - as the period of deferment is now over, please ensure that, if you pay by direct debit, the mandate is reinstated at least three days before you submit your VAT return. 

All UK businesses are eligible.   

How to access the scheme
  • This is an automatic offer with no applications required. You do not need to tell HMRC that you are deferring your VAT   payment.
  • Taxpayers will be given until 31 March 2021 to pay any liabilities that have accumulated during the deferral period.
  • VAT refunds and reclaims will be paid by the government as normal.  

Payments made by Direct Debit
See above about reinstating your direct debit mandate from 30 June, if you use that method of payment.

Income Tax payments have been deferred until 2021 

Your Self- Assessment payment on account, that is ordinarily due to be paid to HMRC by 31 July 2020 may now be deferred until January 2021.

If you were due to make a Self-Assessment payment on account on 31 July 2020 then you are eligible for the deferment.
The deferment is optional - anyone able to pay their second self-assessment payment on 31 July 2020, should still do so.

The government has now further extended the deferment by allowing taxpayers who deferred their July 2020 Income Tax payments on account to 31st January 202,1 and who have non-deferred tax payments due under self-assessment on 31st January 2021 to pay these over a twelve-month period. This applies to taxpayers with liabilities due under self-assessment on 31st January 2021 of up to £30,000.

How to access the scheme

  • Deferred Self-Assessment payment is an automatic offer. You do not need to apply.
  • No penalties or interest for late payment will be charged in the deferral period.
  • HMRC has also scaled up its Time To Pay arrangement, which is a method of spreading your business tax payments over a longer period of time in a more affordable way. It is available to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.

If you are having trouble paying your tax bill or may struggle to meet your tax obligations in the future, call the 

HMRC Coronavirus Helpline
Telephone: 0800 024 1222
Monday to Friday, from 8 am to 8 pm

Rates relief 

Rates holiday for businesses
There is a four-month rates holiday for all business ratepayers, excluding public sector and utilities. The effect of this is that no rates will be charged for April, May, June and July 2020. This will be shown as a discount on the annual rate bill for business ratepayers.

Rates relief for specific sectors
In addition, the sectors hardest hit by the coronavirus pandemic will pay no rates for the full financial year up until 31 March 2021. Those sectors are:

  • hospitality, tourism and leisure
  • retail (excluding certain supermarkets and off-licences)
  • childcare
  • Belfast City Airport, Belfast International Airport and the City of Derry Airport

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