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HMRC will pay you interest
It is not that well-known that HMRC will pay you interest on tax paid early. The interest rate is only 0.5% though, so it isn’t going to change your life.
In the case of Corporation Tax, any payment is due 9 months and a day after your year-end. If you have a business bank account that pays no interest and the cash to pay your tax early you can pay your tax as soon as you have filed your return. After the 9 months is up HMRC will send you the interest calculated.
What spare cash?
See my earlier post on paying your debts first. In the situation where you have cash in the bank that you aren’t putting to good use and no outstanding debts paying your tax liability early will yield a small benefit.
Get your tax return done early
It is difficult to plan your cash flow if you don’t know how much tax you are due to pay. Even if you don’t want to pay your tax early, it is helpful to know how much cash you will need to set aside. The later you leave it to file your tax return the more pressure you can end up putting on your cash flow. More importantly the later you leave it, the more pressure you put on your accountant. Most accountants increase their fees as tax deadlines approach – or to put it another way you are likely to get a discount for starting early!
Don’t be late!
It won’t surprise anyone that HMRC will charge interest on late payments. The interest rate isn’t the measly 0.5% mentioned above but is currently 3%. As Bank of England rate increases – expect this to increase too!
For support and advice on preparing your annual accounts and filing your tax returns contact Alterledger or visit the website alterledger.com.
I found this on the Gov.uk website and thought is was well worth re-blogging
The following bizarre, exotic and flimsy excuses have all been used by tardy taxpayers:
- My pet goldfish died (self-employed builder)
- I had a run-in with a cow (Midlands farmer)
- After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
- My wife won’t give me my mail (self-employed trader)
- My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
- I’ve been far too busy touring the country with my one-man play (Coventry writer)
- My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
- I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
- Our business doesn’t really do anything (Kent financial services firm)
- I’ve been too busy submitting my clients’ tax returns (London accountant)
All of these people and businesses received a £100 penalty from HM Revenue and Customs (HMRC) for filing late. They appealed against the decision using these excuses, but were unsuccessful.
HMRC’s Director General of Personal Tax, Ruth Owen, said:
There will always be unforeseen events that mean a taxpayer could not file their tax return on time. However, your pet goldfish passing away isn’t one of them.
If you haven’t yet sent your 2012 to 2013 tax return to HMRC, you need to do it online and pay the tax you owe by the end of January. With all the help and advice available, there’s no excuse not to.
To send an online tax return, you must be registered for HMRC Online Services. This involves HMRC sending you an Activation Code in the post, so allow a few days for this to arrive. To register for HMRC Online Services go to the HMRC website and follow the on-screen instructions.