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Where tax is collected through your PAYE code, the tax you owe will be taken from your salary or pension in equal instalments over 12 months, along with your usual tax deductions. The adjustment is made by adjusting the tax code applied to your income, which will reduce your take home pay. 

Please note that if you wish to pay your tax through your tax code, the deadline for submitting your self-assessment tax return has been brought forward to 30th December. 

You can pay any underpaid tax through your tax code if you: 

  • owe less than £3,000 
  • already pay tax through PAYE 
  • submit a paper tax return by 31st October or an online tax return by 30th December 

You must also have sufficient PAYE income to pay the tax. HMRC will not adjust your tax code if: 

  • you don’t have enough PAYE income for HMRC to collect it 
  • you’d pay more than 50% of your PAYE income in tax 
  • you’d end up paying more than twice as much tax as you normally do 

You will automatically pay underpaid tax through your PAYE code, unless you specifically ask HMRC not to. This can be by ticking a box on your self-assessment tax return, or asking your accountant to do so. Your accountant may do this automatically and advise you of this, you can then decide how to you’d like to pay your tax. 

You can’t pay outstanding class 2 NIC through your tax code. If this is included in the balance you owe to HMRC you must make this payment separately. 

If you’d like our help submitting your tax return, please contact us today on ::telelphone:: or use our online contact form

Date published 9 Nov 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Catherine Heinen, FCCA

Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.

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