Pay monthly plans come with steep interest charges

Taxpayer late payment plans rise by over a fifth

The number of UK taxpayers unable to pay their tax bill in full before the January 2023 deadline has surged, as the rising cost of living weighs on people’s personal finances.
More than 21,000 taxpayers have made an arrangement to pay their self-assessment bill in monthly instalments beyond the January deadline for the 2021-22 tax year, 22 per cent more than set up similar plans at the same time last year.
More than 12mn people needed to file a tax return for the last tax year. Those who have set up a so-called “Time to Pay” plan, which allows payments to be spread over 12 months after the deadline, face a late payment interest charge set at the Bank of England base rate plus 2.5 per cent. This puts the charge at 5.5 per cent from November 22.

He added that as the government allowed people to defer the second payment due on account in July 2020, many of those who did this would now be catching up with their tax bill payments.
“Those that weren’t able to get on top of the higher tax bills because of previous deferments would now need to access the payment plan option,” he said.
This story originally appeared on: Financial Times - Author:Mary McDougall