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COVID-19: UK Government Announces Income Tax Deadline Deferral, Other Measures for Individuals

March 24, 2020

The UK government has made a number of announcements that may affect individuals who are UK resident taxpayers, including income tax deferral and statutory sick pay changes, during the coronavirus (COVID-19) pandemic. 

Income Tax Deferral

Individuals who are self-employed and most partners in a partnership (including an LLP) pay tax under self-assessment, rather than through the pay-as-you-earn (PAYE) scheme. For such individuals, income tax is normally payable in two installments, the first by January 31 of the tax year in question (tax years ending on April 5 each year in the United Kingdom), and the second by the following July 31.

The UK government has announced that the July 2020 due date for the second installment for any such individuals who pay tax under self-assessment will now automatically be deferred until January 2021.

This announcement does not affect employees for whom tax is paid under PAYE, but employers should see our alert regarding the UK government’s job retention scheme: COVID-19 – Important Additional Considerations for UK Employers.

Time to Pay

HM Revenue and Customs (HMRC) already had in operation a time to pay scheme, allowing in some cases bespoke plans to give additional time to meet tax liabilities. This scheme is still in operation, and HMRC has announced that it will dedicate additional staff to handle calls.

Statutory Sick Pay

UK employees may also be affected by the recent relaxation of the statutory sick pay rules, which now enable individuals to qualify for statutory sick pay from the first day of absence for sickness or due to COVID-19 reasons. This announcement also covers increased access to universal credit for those who are self-employed.

Other Business-Related Items

See our alert on other measures for UK businesses that may affect self-employed people and small business owners, including deferral of value-added tax (VAT) payments, the business rates holiday for certain sectors, and the business interruption loan scheme.

The UK government has also deferred implementation of recent changes to expand the rules for off-payroll workers.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

London
Kate Habershon
Neil McKnight
Grace Tan