Thursday, 1 December 2011

Can you defer paying £3,000 tax?



Until recently personal tax bills of up to £2,000 Could be repaid through your PAYE tax code. Next year the figure rises to £3,000, Can you take advantage of it now?


PAYE Advantages Those paying their taxes through the PAYE system, directors, employees and pensioners, can choose to spread their tax bill for one year over a later one. This is done by adjusting their PAYE code for the later year adjusted to recover what they owe. Finance Act 2011 increased the amount recoverable in this way to £3,000 from the next tax year but HMRC has now brought this forward.


Not too late The notes to the 2010/11 tax return correctly state that you cannot have any underpayment coded out if it is more than £2,000. However HMRC have recently announced they will extend this option for bills of up to £2,999.99. (See http://www.hmrc.gov.uk/payinghmrc/taxcode-vdp.htm#1 )

TaxTip Even if you have already submitted your 2010/11 return showing tax payable by 31 January 2012, you can take advantage of HMRC's recent offer by telephoning them asking for your tax bill to be coded out.


December Deadline If you haven't completed your return yet, but suspect you owe HMRC money, you need to get your return to them by 30 December to take advantage of the coding option., After this date, the coding option is not available and any tax due must be paid by 31 January 2012,


No Tax Return If you are not in the self assessment system but have received a tax calculation (Form P800) for 2010/11,you'll automatically benefit from the new limit. HMRC will simply include the amount due in your 2012/13 code. If this does not happen, contact HMRC immediately.


Time-to-pay-deals Bad news for those paying their tax under a time-to-pay deal. HMRC have said the new coding-out rule will not apply to them and they must stick to the schedule of payments already agreed.


To Do If you owe tax of less than £3,000 for 2010/11, phone HMRC by 30 December and ask them to reduce your 2012/13 code to take this into account. This will spread the bill over the next twelve months beginning in April 2012.
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