In the 2021 Budget, the government made a number of announcements about support for small businesses that have been affected by the coronavirus crisis. These updates included extending the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, as well as freezing some tax thresholds.
However, these are not the only support measures for small businesses that have been announced in recent weeks. Here’s a rundown of some other news you might have missed.
Late-payment penalties for Self Assessment tax postponed
Normally, businesses can expect a 5% late-payment penalty on any Self Assessment tax that is still outstanding on 3rd March but HMRC has extended this deadline for 2021.
HMRC will not charge a 5% late-payment penalty to Self Assessment taxpayers who missed the payment deadline of 31st January, provided that they pay their tax bill or set up a monthly payment plan before midnight on 1st April 2021.
HMRC will still charge interest to businesses that missed the 31st January deadline for payment.
A new payment scheme for deferred VAT
In 2020, HMRC gave VAT-registered businesses the option to defer VAT payments until 2021. This option applied only to VAT payments that were due between 20th March and 30th June 2020.
HMRC recently announced a range of payment choices for businesses that deferred VAT payments during this period. HMRC will allow businesses that deferred VAT payments to choose one of the following:
- pay the deferred VAT in full before the end of March 2021
- join the VAT deferral new payment scheme by 21st June 2021
- contact HMRC by 30th June 2021 to agree an alternative payment arrangement
These businesses may face a penalty if they do not complete one of the above options by the relevant deadline.
The VAT deferral new payment scheme
The VAT deferral new payment scheme will be open until 21st June 2021. The scheme allows business owners who deferred VAT payments in 2020 to:
- pay deferred VAT in interest-free instalments
- choose the number of instalments to pay (between 2 and 11 instalments, depending on when the business joins the scheme)
You can find more information and apply to join the VAT deferral new payment scheme through HMRC’s website.
You can find more information and support for small businesses on our dedicated coronavirus hub.
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.