Why is 30 December 2016 such an important date?
So why is 30 December 2016 so important?
• You are obliged to file a Self Assessment Tax Return (SATR) for 2015-16 and
• You have underpaid tax for this year and
• Some of your income (including private pension receipts) is taxed under PAYE
…then you can apply to have your tax code number adjusted downwards in a future tax year to repay your underpayment by instalments.
Your future income tax deductions will be increased to recover the amount underpaid.
Many tax payers will find this a great option as HMRC would be collecting tax underpaid sometime in the future.
As an example, if you had underpaid for the year ending April 2016 by £2,400, HMRC would not adjust your code number until April 2017. Consequently, instead of paying the underpayment in one chunk on or before 31 January 2017, your income tax deductions from April 2017 would be increased by £200 a month until March 2018.
There are certain conditions that must be met in order to secure this deferred repayment option. HMRC will not do this if it would reduce your take home pay by too large an amount. There are also limits on the amount of tax that can be recovered in this way.
But you MUST file your 2015-16 Self Assessment Tax Return online before 30 December 2016 otherwise HMRC will not accept a claim to settle tax arrears using this method.
Tax payers who have not yet filed their 2015-16 returns have the best part of two months left to get this done if they anticipate they will have tax underpaid for the year and want to repay it gradually over the tax year 2017-18.