Local accountants and tax advisers, Trueman Brown, advise taxpayers that if they owe no more than £3,000 in tax for 2023/24, they may be able to pay their tax bill through PAYE if you file your tax return by 30 December 2024.
If you need to file a self-assessment tax return for 2023/24, you must do this online by 31 January 2025 if you want to avoid a late filing penalty.
However, if you received your notice to file a tax return after 31 October 2024, a later deadline applies; you must file the return within three months of the date of the notice to file.
You must also pay any remaining tax that you owe for 2023/24 by 31 January 2025.
If you are self-employed, this is also the deadline for paying Class 2 and Class 4 National Insurance for 2023/24.
Where your tax and Class 4 National Insurance liability for 2023/24 is at least £1,000, you must also make your first payment on account for 2024/25 by the same date, unless at least 80% of your tax liability for the year is collected at source, for example, under PAYE.
The need to pay any remaining tax and National Insurance for 2023/24 plus the first payment on account for 2024/25 by 31 January may present something of a financial challenge, particularly given the cost-of-living crisis.
However, if you have a source of income that is taxed under PAYE, there is a way to spread the cost without the need to agree to a Time to Pay arrangement — by opting to pay your self-assessment bill through PAYE.
Am I eligible?
You can pay your self-assessment tax bill for 2023/24 through PAYE if:
- you owe less £3,000 on your tax bill.
- you already pay tax through PAYE (for example, on employment or on a pension).
- you submitted your 2023/24 tax return online by 30 December 2024 or you filed a paper tax return by 31 October 2024.
However, you will not be able to choose this route if:
- your PAYE income is insufficient to collect the tax that you owe (in addition to the tax on that income).
- as a result of the adjustment, you would pay more than 50% of your PAYE income in tax.
- collecting self-assessment tax through PAYE would more than double the tax paid in this way; or
- your tax bill was more than £3,000 but was reduced below this amount as a result of payments on account.
If you owe more than £3,000, you cannot use this option – it is not possible for £3,000 to be collected under PAYE and the balance to be paid by 31 January.
However, if you are struggling to pay, you could consider setting up a Time to Pay arrangement to spread the cost.
Where you elect to pay your 2023/24 self-assessment tax bill through PAYE, your 2024/25 tax code will be adjusted to collect the tax throughout the 2024/25 tax year.
This effectively allows you to spread the cost over 12 months and pay in interest-free instalments. In a climate of rising interest rates, this is an attractive option (although on the downside, it will reduce your take-home pay each month).
Local accountants and tax advisers, Trueman Brown, deliver vital services for small business. Please contact us if you require assistance.
Recent Comments