Help with VAT, business rates and personal income tax payments on account

Along with the other measures that the government has introduced to help businesses survive the coronavirus pandemic, HMRC has allowed UK VAT registered businesses to defer payment of VAT that would have been due between March 20th and June 30th, this year.

It isn’t necessary to inform HMRC, who won’t charge any penalties or interest on the deferred sums, but businesses must continue to file VAT returns and will still have to pay the tax by March 31st, next year.

It is important to note that the VAT ‘holiday’ does not include payments for VAT MOSS or Import VAT, and businesses that pay VAT by direct debit will need to stop the payments from their bank account.

HMRC has not announced any plans to help businesses with Corporation Tax payments, but individuals who are due to make a payment on account for their personal Income Tax by July 31st, following their self-assessment return, may defer payment until January 31st, 2021, without incurring a penalty or interest.

Some businesses may also be eligible for relief or reductions in their business rates, which should be applied automatically by local authorities.

In England, businesses in the retail, leisure and hospitality sectors, (including shops, pubs, cafés, clubs, hotels, gyms, spas, B&Bs etc.), as well as Ofsted, registered nurseries will not have to pay business rates for the 2020/21 tax year.

Businesses in the retail, leisure and hospitality sectors in Wales, will also receive 100% business rates relief, as long as the rateable value of the property is not £500,000 or more.

The 100% rates relief applies to retail, leisure and hospitality businesses in Scotland too, but all other non-domestic properties in Scotland will also benefit from 1.6% business rates relief.

The relief in Northern Ireland is quite different, in that all private sector businesses (except for utility companies) will benefit from 3-months’ relief and deferral, with business rates bills that were due to go out in April, being held back until June and including the 25% discount.

While eligibility and the terms may vary from country to country, all business rate reductions should be automatically applied by local authorities.

Authored by ARAG