Thousands of people have taken advantage of an HM Revenue & Customs offer to delay paying their tax bill to help manage the effects of the pandemic.

Advisers warn many more taxpayers face difficulties meeting the January 31 deadline to pay their dues for 2019-20 as people struggle with everything from redundancy to Covid-19 restrictions.

The tax authority revealed this week that almost 25,000 people had chosen to use a scheme announced in October and spread their tax bill over 12 months, rather than paying it by January 31. The amount involved totals £69.1m, with the average payment plan put at £2,821.

Those who file returns before January 31 can set up a “Time to Pay” plan online for up to £30,000 in tax owed. However, individuals must meet certain criteria including not having any other outstanding tax debt or tax returns. Interest of 2.6 per cent per annum will be charged on the tax owed from February 1.

Dawn Register, head of tax dispute resolution at BDO, an accountancy firm, said Time to Pay would be useful for “potentially millions of people who can’t pay their tax bill” this year.

But taxpayers should move quickly. The Institute of Chartered Accountants in England and Wales (ICAEW) says would-be applicants must apply by March 2, to avoid triggering a 5 per cent late payment penalty.

Even with the scheme in place, many taxpayers have worries.

What if I don’t meet the Time to Pay criteria?While HMRC’s Time to Pay will help many, some will fall outside the net. For example, small business owners who have outstanding tax debts. Anyone with questions can call HMRC’s helpline: 0300 200 3822.

What if I am already making payments on account?The “payments on account” facility allows the self-employed and some others to pre-pay their income tax bills in twice-yearly instalments, with the amounts based on the previous year’s earnings. The first such payment for 2020-21 falls due in January, with the second in July.

People who expect their tax bills for 2020-21 to be lower than 2019-20 — perhaps because of the pandemic — can reduce the first payment, using the tax return. Taxpayers should also remember that coronavirus support grants like the Self-employment Income Support Scheme are taxable.

What if I can’t file on time?A campaign by professional bodies to postpone the self-assessment filing date has so far failed, with HMRC sticking to its usual procedures. Late filing of tax returns will attract an initial £100 penalty and further fines, which mount over time.

The tax authority says it will accept Covid-19 as a reasonable excuse for failing to file on time. Yet it declines to give specific examples of excuses, saying only that it would treat submissions sympathetically on a “case by case” basis.

Will HMRC really show late filers much mercy?Despite the promise of leniency, advisers warn taxpayers to do their utmost to meet the deadline, with the ICAEW suggesting people submit a return using estimates if necessary.

Nimesh Shah, chief executive of Blick Rothenberg, says: “It will take time to appeal [against a penalty] and it is never guaranteed that HMRC will accept the appeal, despite their apparent show of sympathy . . . Self-employed individuals should file their return by January 31, as they risk being excluded from future government support.”