HM Revenue & Customs (HMRC) have recently confirmed that businesses that owe less than VAT £20,000 can now set up a payment plan online. 

The measure, which came into effect on 31 May 2023, is part of a wider project from HMRC to digitise tax reporting and payments, to reduce the number of calls placed to HMRC advisers.  

While the move will be providing relief for HMRC advisers, many businesses in the country will now be able to set up a payment plan with a minimum of fuss and avoid lengthy call queue times to HMRC.  

Who is eligible 

Businesses need to meet the following criteria to be eligible to set up an online payment plan: 

  • Have filed their latest tax return 
  • Owe £20,000 in VAT or less 
  • Are within 28 days of the payment deadline  
  • Do not have any other payment plans or debts with HMRC 
  • Pay the debt off within six months 

Any businesses in the Cash Accounting Scheme, Annual Accounting Scheme, or that make payments on account are not eligible to set up an online payment plan and will have to contact HMRC in the usual way.  

What is needed to set up a plan? 

To set up an online payment plan, the below are required: 

  • The relevant reference number for the tax to be paid such as a unique tax reference number. 
  • Bank account details 
  • Details of any payments missed previously  

While the recent announcement from HMRC pertains to paying VAT, online payment plans can also be set up for paying tax on Self-Assessment tax returns and employers’ PAYE contributions, albeit with different eligibility criteria. 

Self-Assessment repayments 

Self-Assessment payment plans can be set up online if the latest tax return has been filed, the business in question owes £30,000 or less, are within 60 days of the payment deadline, and does not have any other payment plans or debts with HMRC. 

Employers’ PAYE contributions repayments 

If employers’ PAYE contributions are owed, an online payment plan can be set up if £15,000 or less is owed, the business is within 35 days of the payment deadline, and the debt is also paid off within six months. 

Businesses who want to set up an online payment plan for PAYE contributions must also have submitted any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due, as well as ensuring that they have no other debts or payment plans with HMRC or any outstanding penalties to pay. 

Do you require assistance with setting up an online payment plan for tax due? Contact us today. 

Posted in Advisory Insights, Blog, Blogs, Business, SME, VAT.