Nobody wants to run out of money, but sometimes we don’t plan enough in advance and a bill hits us that we weren’t expecting. But what if that bill is your self-assessment tax bill? What can you do?
There are a few options that are open to you. If you know you will be earning enough money in the next few months to cover the tax bill, but you’re just a little short now, you could take out a short term, low interest loan.
As of January 2018, HMRC are no longer taking personal credit cards as payment for your taxes. So, the route of getting a 0% credit card is unfortunately no longer an option.
When you realise you won’t be able to pay your tax bill
The best advice is to immediately get in touch with HMRC, ideally before the due date which is 31st January (for the first instalment of this year’s taxes and the balancing payment of last year’s taxes) and 31st July (for the second instalment of this year’s taxes).
If the due date passes, and you have not paid you will have to pay interest on the tax amount owed.
Make sure you have all your details ready before you make the call. These include
- Your tax reference number
- The amount of tax you can’t pay
- The reasons why you can’t pay
- What you have done so far to try and get the required sum
- Whether and how much you can pay immediately
- How long you need to pay the rest (you need to suggest a payment plan; don’t offer more than you can afford to pay per month)
- Your bank account details
Calling HMRC does not necessarily guarantee that you will get more time to pay or are allowed to pay in instalments (current interest rate 0.5%). But if you have good enough reasons and can show that you will be able to pay if given a chance, your odds are fairly high. You will be asked questions about your savings, investments and what you’re planning to do to get your tax payments back in order.
What happens if you don’t get an extension on your tax bill
If HMRC decide that you are not able to sort out your tax payments with more time, you won’t get more time or an instalment plan. You will have to pay your taxes immediately. If you can’t, HMRC will start legal proceedings which can include (and are not limited to) debt collection agencies, seizing items to sell them or take money out of your accounts. Worst case scenario, they can make you bankrupt or close down your business.
Don’t let it get that far. The best advice we can give you is to put away a percentage of your income every month so that you always have enough money to pay when the deadline approaches.
How can Alba help you?
The sooner you send us your accounts and receipts, the sooner we can prepare your self-assessment tax bill. You can send all your details as soon as the tax year finishes in early April. We then prepare your accounts and can create a plan together with you on how you can come up with all the money you need for your tax bill. You will have many months to save up the right amount.
Unfortunately, we cannot ring HMRC on your behalf if you realise you have a problem. You will have to do that yourself, we’re simply not allowed to by law.
If you have any questions regarding your self-assessment tax, please do not hesitate to contact us. You can reach us via email admin@alba.uk.com or phone 01509 853779.
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