Tens of thousands of sole traders and company directors have amassed growing debts with the tax authority, struggling to pay off larger-than-normal tax bills due at the end of the month.
Close to 25,000 taxpayers, with payments due on Jan 31, have asked to spread £69m in payments over 12 months. This is since HM Revenue & Customs made it easier to apply for debt management plans in October.
They join hundreds of thousands of others who already have the Government’s “Time to Pay” scheme, worth billions in revenue.
A quarter of self-employed workers plans to delay paying, according to polling from consumer group Which?. Many face paying much more than normal as one in five have already deferred “unaffordable” July 2020 tax bills, also due to be cleared at the end of the month. One in six said they had no idea how they would cover their tax bills.
They face repayment interest rates of 2.6pc if they chose to spread the cost. Last year there were no penalties for deferring payment.
Those who fail to pay by Jan 31 without an agreed payment plan will be hit with an immediate late payment fine of £100 and additional penalties and interest charges, which can spiral into the thousands if left.
Experts fear a rise in the number of late filers this year, as people focus on steering businesses through the pandemic and accountants struggle to process an unusually large workload. More than a million filled late last time around before the pandemic began, triggering more than £100m in automatic penalties.