HMRC now offer a payment method which allows you to make voluntary contributions towards your future personal tax bills.
If you are registered for self assessment online and are up to date with your tax payments, you can set up a regular amount to be collected by HMRC either weekly or monthly via a Direct Debit.
The budget payment plan is a flexible method of payment and allows you to:
- change your regular payment amounts if you wish,
- suspend your payments for up to 6 months, and
- cancel the payment plan at any time.
Your personal tax payments must be up to date before you can set up a budget payment plan. HMRC helpline staff can assist with bringing your affairs up to date if you require.
There are many benefits to setting up a budget payment plan including:
- Safe and secure payments, protected by the Direct Debit Guarantee
- Greater control over your finances
- Spreading the cost of your future tax bills
- Reducing the risk that you will be late in paying your tax
Those who use this scheme are effectively lending their money to HMRC without any return on your investment and so this is perhaps not a ‘good investment’. However, it may have its uses if you struggle to have the discipline to save for your personal tax or would just feel happier if you were able spread your tax payments over a number of months, regardless of the fact that some of it will be in advance of the actual due dates.
Other uses of the direct debit facility
The direct debit facility can also be used to set up single payments of personal tax such as those due in January and July each year, where applicable, which reduces the need for you to remember to pay your personal tax, only requiring you to ensure that the money is there to pay it.
When setting up a direct debit, you must allow 5 working days before you wish to make the payment.
More information regarding budget payment plans is available on the HMRC website.
For assistance with your tax calculations or to discuss how budget payment plans may help you, please contact us.
