How to spread your personal tax bill
HMRC don’t give much away, in fact the second you’re late paying your tax, interest starts to clock up. So when there’s a way to make tax a bit less painful, it’s time to grab it.
You can’t avoid paying tax, but as long as your tax liability for the tax year is less than £3,000, you can spread the payment over the next tax year – as long as you tick the HMRC boxes.
Box 1: It is only available if your tax liability is less than £3,000 for that tax year.
Box 2: You must pay your income tax through PAYE, either as an employee or through a company pension.
Box 3: You must file your tax return by 30th December if filing electronically.
That’s it.
How it works
Your liability changes your tax code, so the outstanding amount is taken through this.
If the changed tax code results in the tax element of your pay exceeding half the total amount, it’s not going to fly. If you work part-time or earn a relatively small amount, you’ll need to work out (or get someone in the know to do that for you) what the actual deductions will be.
Also if the changed tax code more than doubles your tax deduction, that won’t be accepted either.
In order for your tax liability to be taken to your tax code you must select this as an option when submitting your tax return. The liability being taken to your tax code is not automatic.
Is it worth it?
The liability is spread, so you don’t have to find a big lump of money right after the festive season. The notorious January credit card bills won’t be compounded by another big bill to pay.
The big plus is that, unlike credit card bills, tax paid via your tax code does not attract interest. That alone makes it worthwhile.
Got a question? Then feel free to get in touch with our expert team and we’ll help you find the solution you’re looking for!
