File your tax return by 30 December 2020
Although the deadline by which your 2019/20 self-assessment tax return must be filed online is 31 January 2021, an earlier deadline of 30 December 2020 applies if you want any tax that you owe for 2019/20 to be collected through PAYE. This can be advantageous as you can spread the cost across the tax year, rather than paying it in a single instalment.
You can pay your self-assessment bill through PAYE if all of the following apply:
- the amount that you owe is £3,000 or less;
- you already pay tax through PAYE (for example, because you are an employee or you receive a company pension); and
- you either submitted a paper tax return for 2019/20 by 31 October 2020 or filed your return online by 30 December 2020.
You should note that if you meet all of these conditions, HMRC will collect any tax that you owe through the PAYE system. If you file your self-assessment return by 30 December 2020 and owe less than £3,000 and do not want to pay it in this way, you will need let HMRC know. You can do this on your tax return. If you choose this route, you will need to pay the tax you owe for 2019/20 by 31 January 2021 (unless you have agreed a Time to Pay arrangement with HMRC).
You will not be able to pay any tax that you owe via PAYE if:
- you do not have sufficient PAYE income to cover the tax that you owe;
- collecting tax in this way would mean that you would pay more than 50% of your PAYE income in tax; or
- if you would end up paying twice as much tax as you would do otherwise.
Collection through your tax code
Your tax code will be adjusted to facilitate the collection of the tax that you owe through the PAYE system. The adjustment will reflect the amount that you owe and the rate at which you pay tax.
Underpayments for 2019/20 will be collected by adjusting the 2021/22 tax code. Adjusting the tax code will have the effect of collecting the underpaid tax in 12 equal instalments over the 2021/22 tax year. Interest is not charged, meaning this is an interest-free way of paying any tax that you owe in instalments.
Speak to us
If you have a tax underpayment of £3,000 or less and would like it to be collected via an adjustment to your 2021/22 tax code, please let us know so that we can ensure that your 2019/20 tax return is filed by the 30 December 2020 deadline.