As part of the government's coronavirus help for those who pay tax by self-assessment, this year's July payment on account deadline has been deferred to 31 January 2021.
Here, we explain the pros and cons of deferring July's payment on account, along with other options for self-employed workers whose income has been affected by the coronavirus outbreak.
This year's payment on account, which would usually be due by 31 July, is being automatically deferred for taxpayers who usually pay their bill in this way.
Instead, the tax you would have paid will instead be due by 31 January 2021.
The assumption is that people will have more time to prepare and save to pay their tax bill, and hopefully any coronavirus-related falls in income will have been smoothed out by then - but that may not be the case for everyone.
Deferring July's payment presents a number of other issues that you should weigh up.
Firstly, the amount of tax due by the end of January 2021 is likely to be much more than usual. You'll have to cover the deferred payment on account for July, possibly a balancing payment if it turns out you owe more tax for 2019-20 than you've already paid, as well as your first payment on account instalment for the 2020-21 tax year.
If you're able to make this month's payment on account, and want to, you can choose to do this in the usual way.
It should be treated as a voluntary payment, and HMRC should credit the funds to your self-assessment record, where it will be set against your confirmed tax bill after you've submitted your 2019-20 tax return.
If you think your profits for 2019-20 are less than 2018-19 (which is what this year's payment on account figures are based on), you can apply for these tax bills to be reduced.
You don't need to provide any proof that your tax bill will be lower than the previous year, but you shouldn't make it unrealistically low. If it turns out that you owe much more tax after having your payment on account bill lowered, HMRC may charge you interest on the difference owed.
Whether you decide to make July's payment on account or not, you could benefit from submitting your 2019-20 tax return sooner rather than later.
Filing your tax return early has several advantages, including:
If you know you're going to struggle to pay the tax you owe by 31 January, contact HMRC as soon as possible.
You may be able to make a 'payment proposal', where you can suggest alternative ways to pay your bill - this could be through monthly or quarterly instalments, for example.
HMRC will consider the proposal, but may ask for details of other assets you hold (such as savings or investments) before accepting the offer.
Many people who pay tax by self-assessment make payments on account. This spreads your tax payments across the year and sees you paying in advance of submitting your tax return.
So, for the 2019-20 tax year, which ended on 5 April 2020, those who pay tax by payment on account will have already made the first instalment towards their tax bill on 31 January 2020.
The second instalment is usually due on 31 July, and then the following 31 January is when you'll either make a 'balancing payment' if you haven't paid enough tax, or you'll get a tax refund if you've paid too much.
What you owe for payment on account is based on the amount of tax you paid in the previous tax year; if your profits have reduced since last year then it's likely you'll get a refund; if you've made more money then you'll have to make a larger balancing payment.