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Submit Your Tax Return by 30 December to Have Your Tax Collected Through PAYE

Navigating the complexities of tax season can be challenging, but Hamollisons Bookkeeping Services is here to guide you through an advantageous option for managing your tax payments. The key lies in understanding the importance of the self-assessment submission deadlines, especially for those looking to have their tax collected through PAYE.


Understanding the Deadlines

The standard deadline for submitting your 2022/23 tax return online is midnight on 31 January 2024. However, if you prefer to have your tax bill collected through an adjustment in your PAYE tax code, you need to file your tax return by an earlier date - 30 December 2023.


The Advantage of PAYE Collection

Choosing to pay your tax via PAYE can be a highly attractive option. This method not only saves you from having to pay your entire tax bill in one go by 31 January 2024 but also allows you to pay what you owe in instalments. Additionally, this method comes without the need to set up a Time to Pay arrangement and is interest-free - a significant benefit in times of high-interest rates.


Qualifying for PAYE Collection

To be eligible for paying your Self Assessment tax bill through your tax code, you must meet these conditions:

  • Owe less than £3,000 in total.

  • Already pay tax through PAYE, either as an employee or through a company pension.

  • Have submitted your 2022/23 tax return online by 30 December 2023.

Limitations to Consider

It's important to note that if your Self Assessment bill exceeds £3,000, you cannot opt to pay it via PAYE. However, if you're facing difficulties in payment, a Time to Pay arrangement might be a viable alternative, especially if you owe £30,000 or less.

Additionally, paying your tax through PAYE might not be possible if your PAYE income isn’t sufficient for HMRC to collect what you owe, or if doing so would lead you to pay more than 50% of your PAYE income in tax.


Automatic Adjustment by HMRC

If you file your tax return by the 30 December 2023 deadline and meet all the specified conditions, HMRC will automatically amend your 2024/25 tax code. This adjustment is done to collect the tax you owe for 2022/23. If you don't wish for HMRC to collect tax in this manner despite meeting the conditions and filing by the deadline, you'll need to inform them.


How Does This Affect Your Tax Code?

Your tax code will be adjusted to spread the tax you owe over 12 instalments throughout the tax year, on top of your regular tax deductions. For instance, if you owe £1,200 and are a basic rate taxpayer, your personal allowances will be reduced accordingly to accommodate this payment plan.


Need Assistance?

Understanding tax codes and the self-assessment process can be complex.

For personalised advice and help with your tax return, reach out to us at Hamollisons Bookkeeping Services—your partner in navigating tax season with ease.


Partner note: TMA 1970, s. 8; ITEPA 2003, s. 684; Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), regs. 14, 14A, 14D.

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