One of the less well-known ways of paying your self-assessment tax bill is to do so through your tax code.
This can only be done where all the following apply:
The coding threshold also entitles taxpayers to have tax underpayments collected via their tax code, provided they are in employment or in receipt of a UK-based pension. The coding applies to certain debts such as self-assessment liabilities, tax credit overpayments and outstanding Class 2 NIC contributions. Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.
The amount of debt that can be coded out ranges from £3,000 to £17,000 based on a graduated scale. This is a different limit to that for paying your self assessment bill where the amount owed must be less than £3,000. The maximum coding out allowance only applies to taxpayers with earnings exceeding £90,000.
The full breakdown is as follows:
|Earnings||Coding out limit|
|Less than £30k||£3k|
|£30k to £39,999.99||£5k|
|£40k to £49,999.99||£7k|
|£50k to £59,999.99||£9k|
|£60k to £69,999.99||£11k|
|£70k to £79,999.99||£13k|
|£80k to £89,999.99||£15k|
|£90k or more||£17k|
As mentioned above, taxpayers with underpayments in the tax year 2016-17 have until 30 December 2017 to file their self-assessment returns in order to have the monies collected in the 2018-19 tax year. If you would like to see if you could take advantage of this deferred payment plan we can help you arrange this with HMRC.