Key post-Christmas date in self-assessment calendar could help spread a little New Year tax cheer

December 22, 2015

Many thousands of people who owe extra tax can effectively ask the taxman to spread the cost – interest free – over 12 months provided they file their online return by December 30.

According to experts at accountancy, investment management and tax group Smith & Williamson, many of those who pay tax under self-assessment could benefit by submitting their tax return before the end of the year rather than leaving it until January 31.

Partner and head of private client tax services at the firm’s Bristol office, Imogen Hilton-Brown, pictured, said: “Providing you owe less than £3,000 to HMRC, already pay tax under PAYE and file your return online by Wednesday December 30, HMRC accepts payment for the outstanding tax over the course of the coming year.

“Thousands of people paying relatively small amounts of tax under self-assessment can benefit from this – particularly as it avoids having to settle the entire amount in one go on January 31, 2016, which follows fast on the heels of Christmas expenses!”

She said it was effectively an interest-free loan from HMRC that made it easier for people to pay outstanding tax.  However, anyone wanting to take advantage of it needs to get a move on and file online by December 30.

This option is available to anyone paying tax under PAYE, for example as an employee or if they receive a company pension.

By filing by December 30, HMRC is able to include the extra tax in their PAYE coding. As a result, the tax they owe will be taken from their salary or pension over the next 12 months, along with their usual tax deductions.

Imogen explained: “HMRC will do this automatically unless you tell them not to, because you would prefer to stay in control and pay the tax direct. When completing your tax return, you are prompted by the questions on page TR6 to let them know if you do not want them to code out the underpayment, by putting an X in one or both of two boxes.

“Be sure to read this question and answer it carefully, depending on whether you want HMRC to amend your PAYE coding accordingly.”

Whether someone owes tax on dividend payments from investments in equities, some additional tax on a buy-to-let property, interest on other investments or most other sources, they can often qualify for this helpful treatment.

For those who filed their return on paper (rather than online), the deadline to be eligible for this treatment was October 31, 2015 for the 2014/15 tax year.

While many who pay tax under self-assessment qualify for this route, there will be some with relatively low income and insufficient PAYE income to meet the extra tax costs, who will not be eligible.

They can only pay their self-assessment bill through their PAYE tax code if all the following apply:

*         They owe less than £3,000 on your tax bill;

*         They already pay tax through PAYE;

*         Their return is submitted to HMRC by October 31 (on paper) or by December 30 (online);

*         They have enough PAYE income for HMRC to collect the tax from;

*         Their total PAYE will not be more than 50% of your income subject to PAYE;

*         Their PAYE will not more than double as a result of the coding out.


Comments are closed.


Reach tens of thousands of senior business people across the Bath area for just £75 a month. Email for more information.