Don’t be caught out by the December self assessment deadline!
Are your clients aware of the SA filing deadline this month?
Self-assessment deadlines are looming fast. Although the tax returns filing date is 31 January 2020 for 2018/19 returns, do not forget the 30 December for clients who are eligible to pay their tax through PAYE.
This means the clients do not need to pay any tax in January. They can pay their tax through PAYE if they meet all the following three conditions:
they owe less than £3,000 on their tax bill
they already pay tax through PAYE, for example they’re an employee or they get a company pension
they submitted their paper tax return by 31 October or their online tax return online by 30 December.
How HMRC does collect tax?
If all the above conditions are met, HMRC will automatically collect what they owe through their tax code, unless they’ve specifically asked them not to (on their tax return). Nevertheless HMRC will not be able collect the tax through PAYE tax code if:
they do not have enough PAYE income for HMRC to collect it
they would pay more than 50% of their PAYE income in tax
they would end up paying more than twice as much tax as they normally do.
Additionally self-employed clients cannot pay their Class 2 National Insurance through their tax code, unless it’s been due since before 6 April 2015.
How deductions are made?
The tax due is taken from salary or pension in equal instalments over 12 months, along with other usual tax deductions. The majority of clients rely on their accountant to make sure that their tax code is correctly set up for the next tax year for these deductions – it is good practice to ensure your clients are informed.