HM Revenue & Customs has announced that businesses which deferred VAT payments last year can join a new scheme to pay it in smaller monthly instalments.

More than half a million businesses that delayed payments in 2020 can now opt for the online VAT Deferral New Payment Scheme.

In order to take advantage of the new scheme, businesses will need to have deferred VAT payments between March and June 2020 under the VAT Payment Deferral Scheme.

They will now be given the option to pay their deferred VAT in equal consecutive monthly, interest-free instalments from March 2021.

Businesses will need to opt in to the VAT Deferral New Payment Scheme via the online service that opened on Tuesday (February 23) and closes on June 21.

Jesse Norman, financial secretary to the Treasury, said: “The government has provided a package of support worth over £280 billion during the pandemic to help protect millions of jobs and businesses.

“This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.”

Businesses also have the option to pay the deferred VAT in full, on or before March 31, 2021.