There are some new options available for business owners who chose to defer their VAT payments during the first UK lockdown.
Deferring VAT payments became one of the first measures of support laid out by the government due to the coronavirus pandemic.
Now, business owners who accepted the support (between 20th March & 30th June 2020) can opt into a brand new payment scheme.
Pay In Instalments
The VAT deferral process at the start of the coronavirus pandemic allowed business owners to defer their VAT payments.
Initially it was expected that the amount would have to be paid in full on (or before) 31st March 2021.
That is still an option for business owners who accepted the support between 20th March & 30th June 2020… you can still pay in full by (or on) 31st March 2021.
However a new VAT deferral payment scheme is being launched in the coming months.
This new scheme allows you to arrange a payment plan, and pay in instalments up until the end of March 2022.
How Does It Work?
The scheme is set to allow business owners the option to pay their VAT in instalments across the next tax year, as an alternative to making one full payment by the end of March 2021.
Business owners will get the option to choose how many instalments they want to make (this can be anything between 2 to 11 equal monthly payments) ensuring that the full amount has been paid by the end of March 2022.
What’s more is these instalments won’t add any interest onto your payments either!
It’s a great opportunity for business owners to pay small, manageable, amounts across the year at no extra cost to themselves.
You won’t be able to opt into the scheme yet, as it doesn’t open until early 2021.
When it does open though, your agent won’t be able to sign you up for it – you must opt in yourself through the gov.uk website yourself.
Who Can Use The Scheme?
In order to use the scheme you must:
- have deferred VAT left to pay.
- be up to date with your VAT returns.
- have opted into the scheme by March 2021.
- pay the first instalment before the end of March 2021.
- be able to pay via Direct Debit.
If you want to be extra prepared for when the scheme goes live you can start thinking about the amount of instalments that will best suit your business’ needs.
Here are some others steps you can take to ensure you can benefit from the scheme:
- Create your own government gateways account if you don’t have one yet.
- Submit any outstanding VAT returns from the last 4 years.
- Correct errors on your VAT returns as soon as possible.
- Make sure you know how much you owe!
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