Advice on missed tax payment

Nick Casson

Nick Casson

Below are some topical subjects where advice and guidance have been given recently

Question:

I completely forgot to pay my July tax bill. What will happen?

The payment due in July is like an “instalment” for next year’s tax. HMRC will use your circumstances last year as a basis for setting these. As you have missed the deadline, HM Revenue & Customs (HMRC) may now charge you interest on the amount due until the date you eventually pay it. If you are struggling to pay, you could phone HMRC and ask if they could arrange a payment plan for the outstanding balance. They tend to prefer the tax not to be overdue already though, so this may not be too successful. Alternatively, you could prepare and submit your tax return. This will then trigger the calculation of your actual tax bill, which will then be compared with these instalments (called Payments on Account). Please feel free to contact your local TaxAssist Accountant if you would like to discuss your Payments on Account further or would like some help completing your tax return.

Tax relief on pension contributions - Relief at Source

My boss has enrolled me into a pension scheme. When I looked through the paperwork from the pension scheme, it said I could get tax relief on the pension contributions I make via relief at source. Could you tell me what that means please?

When paying into a pension scheme, members of the pension scheme may receive tax relief on contributions they make. This means that money that would have gone to the government as tax goes into your pension instead. There are essentially two ways you could receive your tax relief; through relief at source or via a net pay arrangement. Relief at source like yours means if you’re a basic rate taxpayer, you don’t need to do anything to get the tax relief paid into your pension. It will happen automatically. If you’re a higher or additional rate taxpayer, to get full tax relief you need to claim back some of your tax from the government. This is because tax relief is only added to your pension at the basic rate of 20 per cent. To get all the tax relief that is due to you, you need to claim back the difference on your annual tax return, or alternatively, if you are a higher rate taxpayer you can contact HM Revenue & Customs.

Information on how tax relief works can be found here: https://www.gov.uk/income-tax-reliefs

Tax relief on pensions contributions - Net pay arrangement

My boss has enrolled me into a pension scheme. When I looked through the paperwork from the pension scheme, it said I could get tax relief on the pension contributions I make, under a net pay arrangement. Could you tell me what that means please?

When paying into a pension scheme, members of the pension scheme may receive tax relief on contributions they make. This means that money that would have gone to the government as tax goes into your pension instead. There are essentially two ways you could receive your tax relief; through relief at source or via a net pay arrangement. A net pay arrangement like yours means your pension contribution is deducted from your pay before tax is calculated, so it reduces the amount of money you get taxed on. For those earning more than the personal allowance (presently £11,000 for 2016/17): You don’t need to do anything to get the tax relief paid into your pension. Your tax relief will happen automatically through the payroll.

For those earning less than the personal allowance: If your earnings are below the level at which tax becomes payable you do not benefit from the tax relief that a taxpayer would receive. However, this doesn’t affect the amount that is paid into your pension and you’ll continue to benefit from the money your employer pays in.

Mileage on a company car

My employer provides me with a company car that is all declared on a P11D. However, they do not cover my fuel costs. Am I entitled to claim anything?

When it comes to company cars and fuel costs, there are essentially three different options:

1. 1. The employer covers all of the fuel costs, including private travel. The employee is therefore taxed on a fuel benefit charge, to account for the private fuel element that the employer is covering

2. 2. The employer covers all of the fuel costs, including private travel. The employee has to record their private mileage and reimburse their employer for it, using the company car advisory fuel rates

3. 3. The employee records all business miles and the employer reimburses the employee for them using the company car advisory fuel rates

Your situation sounds like the third scenario. Your employer is not obliged to reimburse you, in which case you are entitled to obtain tax relief for the expenditure either on your tax return or alternatively, using HM Revenue & Customs form P87.

Please note that due to the frequently changing fuel prices, HMRC regularly updates the advisory fuel rates, so always check their website for the latest figures here: