If you file your 2016-17 self-assessment tax return on or before 30 December 2017, you can elect to spread the repayment of any underpayment of tax for 2016-17 to the tax year 2018-19. This is done by amending your tax code for 2018-19 such that any arrears are repaid by increasing your tax payments each pay period.
There are caveats to the use of this facility, one of which we have already mentioned, that you need to file your 2016-17 return online by 30 December 2017 (if you still file a paper return the filing deadline has passed, 31 October 2017, and so this option would not be available unless you filed prior to this date).
There are two further limitations:
- You owe less than £3,000 for 2016-17, and
- You pay tax via PAYE on your employed earnings or on a private pension.
Additionally, you won’t be able to repay outstanding tax via your tax code if:
- You would pay more than 50% of your PAYE income in tax, or
- You would be paying more than twice as much tax as you usually do.
If you can use this scheme it would spread your tax repayments over a twelve-month period (6 April 2018 to 5 April 2019).
If you are a Jones Harris client and would like to take up this option please get in touch with us for a chat about implementing it.