As people get into the Christmas spirit, self assessment tax payers are facing the doom and gloom of 31 January tax bill but a cash flow benefit can be achieved by getting your tax return in early, says Paul Haywood-Schiefer, tax manager at Blick Rothenberg.
Paul said, 'For those completing tax returns under self assessment, there is always a tendency to leave everything to the last minute, but by getting your return submitted to the Revenue by 30 December, those with liabilities under £3,000 might be able to get this collected through their tax code and spread the payment, rather than paying a lump sum in January.'
He said, 'There are some basic conditions for this to apply, which are that, the return is filed by 30 December 2018, the tax due is below £3,000, you already pay tax through PAYE either as an employee or on a pension, and that your income through PAYE is sufficient to collect the tax without you paying over more than 50% of your PAYE income in tax or paying twice as much tax as you normally do.'
Paul added, 'The real benefit with this is the spreading of the tax payment. January can be a tough month anyway with people spending on their credit cards in the run up to Christmas and also as they are often paid early, meaning they have almost six weeks till their next pay cheque. The opportunity to spread tax seamlessly over 12 months would be a major benefit to many.'
He said, 'There is an important thing to remember with this though. If you do it, then when you come to complete your tax return next year, you will need to include the amount of tax that was collected through your tax code on that form. Otherwise your tax calculation will probably show a repayment, and you might think next year's Christmas has come early!'
For more information, please contact Paul Haywood-Schiefer on PHS@blickrothenberg.com