Important Update: Early Tax Return Submission Benefits for PAYE Taxpayers

As we approach the end of the year, it’s crucial for UK entrepreneurs and small business owners to be aware of an important deadline regarding tax returns. While the general deadline for submitting your 2022/23 tax return online remains 31 January 2024, there is a significant advantage to filing earlier, specifically by 30 December 2023, for those who wish to pay their tax via PAYE.

Why Consider Early Submission?

Submitting your tax return by 30 December allows you to have any owed tax collected through the PAYE system. This method is beneficial as it enables the tax owed to be spread out in instalments over the next year, easing the immediate financial burden. This approach is particularly attractive in the current economic climate, where managing cash flow effectively is more important than ever.

Eligibility Criteria for PAYE Collection

To avail of this option, certain conditions must be met:

  1. You owe less than £3,000 in total.
  2. You are already paying tax through PAYE, such as being an employee or receiving a company pension.
  3. Your 2022/23 tax return is submitted online by 30 December 2023 (or a paper return by 31 October 2023).

It’s important to note that if your Self-Assessment bill exceeds £3,000, the option to pay via PAYE is not available. However, if you find yourself struggling to pay a larger bill, consider exploring a Time to Pay arrangement.

Automatic Adjustment of Tax Code

If you meet all the above criteria and file by the 30 December deadline, HMRC will automatically adjust your 2024/25 tax code to collect the owed tax. This adjustment means the tax will be paid in 12 instalments throughout the year. For instance, if you owe £1,200 and are a basic rate taxpayer, your personal allowances will be adjusted accordingly, resulting in additional tax payments spread over the year.

Final Thoughts

Filing your tax return early can significantly ease your financial planning for the coming year. As always, we’re here to provide guidance and support throughout this process. If you have any questions or need assistance, please feel free to reach out.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.

Any questions?

If you’d like a meeting or a video call to discuss this, please get in touch with your favourite Liverpool accountant