31 January Due Date
31 January 2012 is the due date for payment of any outstanding tax due for the tax year ended on 5 April 2011, to correspond with the 2010/11 tax return, but is also the due date for the first Payment on Account towards next year’s income tax liability (the tax year that ends on 5 April 2012) as well. Most people do not have to make Payments on Account, so those who are employees, pensioners, those where 80% of the tax due is collected via PAYE and those where the Payments on Account would total less than £1,000 can breathe a sigh of relief If you completed your return early, you should have received a reminder of the amount due from HMRC; however, non-receipt of a reminder is no excuse for not paying your tax. If you have completed your return in the past few months, you would have had to do it online, so you should have a note of the amount to pay, or you can check your online record.
How do you go about actually paying tax, and what happens if you are struggling?
The quickest and easiest way for most people would be to pay online.
You can pay by telephone or internet banking and in most systems, you should select HMRC as the payee in the relevant section of your internet banking. HMRC now accept faster payments, but if you are not sure whether your bank uses faster payments or not, allow three working days for the cash to reach HMRC’s account.
You can also set up a direct debit and they will just take the money out of your bank account. Or, if you just want to pay by card you can use BillPay with a debit or credit card, for a 1.4% fee (excluding American Express).
But what if this is all too modern for you? Well you can pay in person via Bank Giro at your bank or via the Post Office. Note that you will need to take an HMRC payslip with you as otherwise you may get charged. Alternatively you can generate and print off a payslip from HMRC’s website.
Finally, you can also pay by post, and stick a cheque in the prepaid envelope they have sent you. You should:
• make your cheque payable to ‘HM Revenue & Customs only’ and write your Self-Assessment reference number after ‘HM Revenue & Customs only’
• detach the payslip and send it with your cheque to HMRC using the pre-addressed envelope sent to you or the appropriate address below
• do not fold the payslip or cheque and don’t fasten them with paper clips or staples etc.
HMRC recommend allowing at least three working days for your payment to reach them and it is important to note that they do not accept postdated cheques.
If you don’t have a pre-addressed HMRC envelope, use the following address:
HM Revenue & Customs
But what if I don’t have the money?
If you are experiencing a short cash flow issue, provided you can pay by 1 March, not paying may be the cheapest option. HMRC will charge you interest on amounts paid late, but at a rate of 3% per annum, 30 days credit from the taxman will be considerably cheaper than putting it on your credit card.
Do note that once the tax is 30 days late, ho
wever, a late payment penalty of 5% is added to the outstanding sum, with a further 5% penalty every six months thereafter.
I really don’t have the money.
If you really can’t pay your tax bill, there are still some things you can do. Right now, you can contact HMRC’s Business Payment Support Service Helpline on 0845 302 1435.
This service is available for individuals and businesses who have not yet received a payment demand, and provided they are satisfied you are genuinely struggling to pay, HMRC may allow you to pay the bill off in monthly amounts by direct debit.
If you wait until after the demand for payment is issued, you will need to speak to your individual tax office about your payment options, and the telephone number will be shown on the demand for payment that will be issued shortly after 31 January.
Note that any late payments will include interest (at 3% per annum) but not penalties.
Chartered Financial Planner
# # #
Census Financial Planning is an independent financial planning practice providing a professional and comprehensive financial planning service, located on the Lisburn Road in Belfast, Northern Ireland.