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Mark Baker, from accountants Jacobs Allen has some top tax-paying tips

As I write this we have just emerged from another January when everybody in our office has been working hard to ensure that our clients’ tax returns have been filed with HMRC on time.

Although the tax returns could have been filed at any time over the last nine months unfortunately it is in the nature of many to delay the inevitable until the last possible moment and to wait until January before getting their information together.

According to HMRC figures more than half of taxpayers had not filed their returns by 6 January this year.

Mark Baker, of Jacobs Allen.
Mark Baker, of Jacobs Allen.

You might be asking what is the problem, since there is no late filing penalty this year provided the return is submitted by 28 February ? However the deadline for the payment of tax remains 31 January and interest will run from that date on unpaid tax.

There is a misconception among some that the filing of a tax return triggers the due date for the payment of tax. This is not true. Tax is payable on 31 January and 31 July no matter when the return is filed. The completion of the return means that the tax can be calculated accurately so you know how much to pay.

If you are in the unfortunate position that you cannot pay your tax on time, it’s best not to bury your head in the sand. Provided you contact HMRC within 60 days of the due date and the tax is less than £30,000 you can pay the debt off over 12 months by a simple online arrangement known as Time to Pay, using your Government Gateway account. For debts over £30,000 you will need to speak to HMRC direct who will want details of your income, expenses and savings before agreeing an arrangement.

Jacobs Allen
Jacobs Allen

The Personal Tax Account, accessed through the Gateway is an invaluable tool for managing your tax affairs, and is one of many changes over the past few years which have ‘digitalised’ the UK tax system. Other changes are not so welcome. Capital gains on the disposal of residential property since 6 April 2020 have to be reported and paid within 60 days of completion, using the Personal Tax Account. While in theory this is straightforward in practice there can be complications and there are penalties for late reporting.

More is yet to come. Sole traders and landlords will need software to record and report their income quarterly to HMRC from 2024. Many believe this will be the precursor to a change from paying tax twice a year to quarterly or even monthly, which may be a good thing if it helps people to put aside money to meet their tax bills.

-- Mark Baker is a director at Jacobs Allen, chartered accountants and chartered tax advisers