The scheme offers support to self-employed workers whose income has suffered as a result of the virus. The Winter Economy Plan extends the scheme until 30th April 2021.
Understanding the deferral of VAT payments
VAT registered businesses also receive support in the form of an extended deferral period to pay their VAT bill.
Under an earlier announcement, VAT payments due between 20th March 2020 and 30th June 2020 could be deferred. This originally gave businesses until the end of March 2021 to pay the VAT they had deferred.
As part of the Chancellor’s Winter Economy Plan, VAT can now be deferred using a 12 month interest-free payment plan. This gives VAT-registered businesses who deferred paying their VAT bill, until March 2022 to pay. It means that businesses can make smaller VAT payments over a longer period of time, without being charged interest.
Income tax deferral
Self-employed tax payers who owe up to £30,000 in income tax have also been given more time to pay. The arrangement enables workers to pay their tax bill over a 12 month repayment plan, running until January 2022.
Temporary VAT reduction rates extended
An existing temporary reduction to the rate of VAT to 5% for businesses operating in the hospitality and tourism sectors have been extended until 31st March 2021. Eligible businesses won’t need to apply, and the extension will be applied automatically.