Do you have to complete a Self Assessment tax return for the tax year 2021/2?
If you’re self-employed and earned more than £1k, you’re a partner in a business partnership, or your combined annual earnings exceeded £100k, you’ll need to file a return by 31st January 2023.
With more than three months left until the deadline, completing your return might not be front of mind right now. While there are many reasons for getting your return in early (peace of mind is just one of them), the reality is that every year, millions of people submit their returns with just weeks, days or even hours to spare.
If you’re usually one of these last-minute filers, perhaps we can prompt you to act earlier this year if we tell you that by leaving things late, you could miss out on the opportunity to delay paying your tax bill and spread your payments over 12 months!
Many people pay their tax primarily through the PAYE system, having it collected by their employer in regular, monthly instalments through their salary. Some of these individuals may also have income from other sources, for example, earnings from property rental or foreign investments.
Any supplementary income of this nature will need to be declared separately on a Self Assessment tax return which must be filed with HMRC no later than 31st January following the end of the tax year to which it relates. Any tax due will also need to be settled by this same date.
However, many people don’t know that, subject to certain criteria; it’s possible to pay your Self Assessment tax in instalments through your PAYE code.
Who is eligible to pay their tax bill through PAYE?
It’s important to note that paying Self Assessment tax through PAYE is not an option available to everyone.
To be eligible to have your tax deducted from your salary or pension through PAYE, you will need to meet three essential criteria:
- The amount of tax you owe must be less than £3k
- You will already be paying tax through the PAYE system: either because you’re an employee or you receive a company pension
- You will need to file your online tax return by 30th December (or your paper tax return by 31st October)
You cannot have tax collected through your PAYE tax code if:
- Doing so means you will be paying more than 50% of your PAYE income in tax
- It will result in you paying more than twice as much tax as you usually would
- You do not have enough income through PAYE to collect the Self Assessment tax you owe
How will paying your Self Assessment tax bill through PAYE benefit you?
In one word – cash flow. While settling any Self Assessment tax you owe through your PAYE code won’t reduce the amount of tax you have to pay – it will positively impact your personal finances by a) pushing back the point at which you have to start paying and b) allowing you to spread your bill over 12 months rather than having to pay it in one lump sum.
If you’re going to have to pay Self Assessment tax on part of your earnings for the 2021/2 tax year and you’re eligible to pay it through PAYE, by filing your return on or before 30th December 2022, you won’t have to pay what you owe on 31st January 2023. Instead, you’ll be able to settle your bill in 12 equal instalments – and the first of these won’t be due until April 2023.
Not a bad deal for simply bringing forward what you’re going to have to do anyway!
Given the effects of the cost of living squeeze we’re all feeling right now, why would anyone eligible not want to take advantage of this opportunity?
If You Think You Qualify, You Need to Act NOW!
At Inca, we provide hundreds of business owners and private individuals with advice and support in relation to their tax affairs.
You need to act quickly if you think you qualify to have your Self Assessment tax collected through PAYE. Contact us to discuss your situation, and if you’re eligible, we can help you complete and file your return by 30th December, so you can take advantage of spreading your tax bill!
Get in touch with one of our advisors today.
Call us now on 01235 868888 email us at [email protected]
