As January 31 gets closer and more taxpayers submit their self-assessment tax returns to HM Revenue and Customs, the challenge of settling the liability will become an issue for many.
However, if you are employed or receive a pension in which your income is subjected to tax deductions through your PAYE code, you owe less than £3,000 and your online tax return is submitted on or before 30 December then help is at hand.
The liability can be collected through next year’s tax code by way of an adjustment to your tax code so to collect the liability over twelve equal instalments. You will need to complete the appropriate declaration within the tax return, and HMRC will notify you of the adjustment to next year’s coding notice at the end of the current tax year.
If you owe more than £3,000, or you earn less than the tax liability or you would end up paying more than half of your income in tax then you will be unable to apply to have your liability collected using this method. Furthermore, if HMRC calculate that your tax deductions would double then the application would be refused.
Hopefully, the suggestion above will work for you and as result spread the cost of your liability and with the annual increase in the personal allowance each tax year there may be even a possibility that you do not notice the deductions too much.
If you are one of the unfortunate who are not allowed to pay through your PAYE code, then you will need to settle your liability in full on or before January 31.
Failure to make the payment on time will result in interest and late payment charges. If you are struggling to make a payment, both myself and the Tax Matters team would recommend you contact HMRC at the earliest opportunity so a payment plan can be discussed.
If you are one of the many taxpayers who receives a combination of taxed and untaxed income and you would like assistance in preparing and calculating your tax liability please do not hesitate to get in contact at email@example.com or 01442 828006 the team would be delighted to speak with you.