Paying your tax on time is important, nobody wants added interest or even worse – a penalty. Here’s a guide on when and how to pay your tax, the recent changes that are coming up this year, and a few tips to help you at this somewhat painful time of the year.
When is my tax due?
Tax is due on two dates of the year, both the 31st, so it should be easy to remember. The first date for your diary is January 31st. Any tax owed from the previous year is due on this date with the first payment on account for the current tax year. The second date is July 31st. This is when the second payment on account is due. These are due dates, so the money has to be with HMRC by these dates to avoid any penalties for late payment.
How can I pay my tax?
There is a range of methods to pay your tax, and thankfully a lot of them can be paid on the same day or the day before your due date. Online or Telephone banking is the quickest and most efficient method. However, you can pay using CHAPS, a debit card, through your bank or your building society. All of these can be used for same or next day payment.
You can also pay by BACS or an existing Direct Debit set up by HMRC both of which can take three working days to clear. Cheque payment is also available.
Ultimately, paying in advance is a much wiser idea and avoids the risk of a penalty if something goes wrong on deadline day, but the same/next day payments are there if you need to use them.
What is changing?
HMRC are making some changes on how you can pay your tax and implementing them soon.
– From 15th December 2017, you can no longer pay your tax at the post office.
– From 13th January 2018, you can no longer use a personal credit card to pay your tax.
I’m asked for my payment reference, where can I find this?
Your payment reference is your 10-digit unique tax payer reference with the letter “K” put after it. You will be asked for this for any online transfers, card payments and direct debit payments. It will be on the demand that you receive from HMRC or you will be able to find your UTR through your Online Personal Tax account if you have access to this. Better still, ask your accountant who will have this stored on their tax return software.
Can I split up my payments?
HMRC offer a budget plan which enables you to pay a weekly or monthly sum instead of all your tax at once. You can choose the amount you want to pay and how often you want to pay it, if the amount you have paid doesn’t meet your tax then you just pay the difference before your due date. To set this up you must have access to your online Personal Tax Account.
Paying your tax on time is extremely important so find a method that works for you and stick to it – setting up a reminder and schedule is a good idea too. Remember the 31st is the due date, so if you pay any time after this you could be subject to interest.