January is never the most enjoyable month, as we recover from festive overindulgence and aim to turn over a new leaf. For many people it’s also Self Assessment time, as the tax deadline looms on 31 January.
It can be bad timing for some people, following Christmas so closely and putting additional pressure on their finances. But if you’re going to find it a struggle to pay your income tax by the 2024 deadline, don’t panic – there are options available.
What the 2024 Self Assessment deadline means
Taxpayers on self-assessment must pay any remaining tax due for 2022/2023 by midnight on 31 January 2024. As well as any outstanding tax for 2022/23, you may also need to pay your first ‘payment on account’ for the current tax year. This applies if your ‘balancing payment’ for 2022/23 is more than £1,000.
You will also need to pay any Class 4 and Class 2 National Insurance due for the same tax year. As of 2022/23, you pay Class 2 NIC if your profits are above the Lower Profits Limit (£11,908 for the 2022/23 year).
If your profits are below the Small Profits Threshold (£6,725 in 2022/23) you can choose to pay voluntary Class 2 NIC. If your profits from self-employment are between the Small Profits Threshold and the Lower Profits Limit then there is no Class 2 NIC to pay. You will still be entitled to benefits.
What are the options if you can’t pay your Self Assessment tax?
When you complete your self-assessment, you will get a bill from HMRC. You can view this when you finish filing your return under ‘View your calculation.’
If you are finding it a challenge to raise the money due, don’t ignore the problem. It will be worse in the long run, and it’s possible to set up a payment plan with HMRC.
Generally you can pay in instalments as long as you have filed your tax return, owe £30,000 or less and are within 60 days of the payment deadline. If you meet these conditions, you can set up the payment plan online.
What if I can’t set up a payment plan with HMRC?
If you’re unable to set up a plan online and need help to manage your bill, contact HMRC direct. Often they will agree a bespoke payment solution that works for both parties. These are called Time to Pay arrangements. Interest is applied to these plans, but they are fairly flexible and can be repaid early if it’s affordable.
To set up a plan, call the Self-Assessment Payment Helpline on 0300 200 3822. If you cannot pay another type of tax, such as corporation tax, call HMRC’s Payment Support Service on 0300 200 3835.
You will need your unique taxpayer reference and National Insurance number; your VAT registration number if applicable; your bank account details, and details of any missed payments.
HMRC will assess your monthly income and outgoings and any savings and investments you have to decide what you can afford to repay each month. Usually if you have savings or investments, you’ll be expected to use these to settle your tax bill.
How to avoid Self Assessment stress in the future
January isn’t great timing for a tax bill, but you don’t have to leave it until then to settle your tax. You can file your self-assessment from 6 April – as soon as the tax year ends. You don’t have to pay the bill at that point, but you will at least know how much it will be.
Early filing also gives you time to do the return accurately and correct any errors if needed. Or, you could employ a friendly accountant to manage the whole process for you and avoid any unwanted surprises.
Worried about Self Assessment Tax Returns? Let us help. As small business accountants in the Lune Valley, we’re here to support you with tax returns, accounting, payroll services and much more. Call us today.