Self Assessment and Tax seems to fill so many people with a sense of dread.
It isn’t as difficult as you may think. Once your tax return has been completed, you will need to pay the tax owed. HMRC allow you to pay by cheque, direct debit, card payment or online banking.
Setting aside money each month can make a big difference, but if you are struggling, here are some options.
Submitted your Tax return already? You may be able to pay the outstanding tax in instalments, and spread the cost. You can use the ‘Time to Pay’ option, assuming you don’t already have a repayment plan in place with HMRC, and owe under £30,000, this could be an option for you. It has been increased this year from £10,000 to £30,000.
You will be charged interest on any balance, so if you can pay in full, it is always best to. You may be able to pay a lump sum off, and then pay the rest in instalments if needed over the next 12 months. The plan needs to be set up within 60 days of the money being due (ie 31st January 2021).
Paying in advance
Paid this tax bill (or will be able to), but worried that you won’t have the money set aside for your future tax bills, and want to make sure you don’t fall behind? One option is to set aside a percentage of your takings into a separate account, and kept ringfenced for your tax bill.
Another option is setting up a budget payment plan with HMRC for future self-assessment tax returns. This lets you pay a certain amount each week or month, and gives you the ability to take payment breaks too. If there is a gap in the amount that you owe, and what you have paid already, you will need to pay this by the usual payment deadline.
If you aren’t sure what option is best for you, getting the right advice is always recommended. Here at Choice Bookkeeping, we can help explain the options, and help you manage your business accounts effectively so you know how much to set aside, or whether a payment option is your best option for future payments. We can also help you with submitting your tax returns too. Call us on 01437 531158 today for a free, impartial chat about how we can help you.