File early to have self-assessment tax coded out

You may be able to have your tax coded out and collected via your tax code when you are in employment or in receipt of a company pension. Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.

If you want to benefit from this opportunity to pay tax due on 31 January through your tax code, then you need to file early. The deadline for the 2022-23 tax year has already passed.

You can have your self-assessment tax coded out through your PAYE tax code as long as all these apply:

• you owe less than £3,000 on your tax bill (you cannot make a part payment to meet this threshold);
• you already pay tax through PAYE, for example you’re an employee or you get a company pension; and
• you submitted your paper tax return by 31 October or your online tax return online by 30 December.

HMRC will automatically collect what you owe through your tax code if you meet these three conditions unless you have specifically asked them not to (on your tax return). There are circumstances when HMRC will not collect the monies through your tax code, for example, if you do not have enough PAYE income to cover he debt.

If you would like to consider having your tax coded out for the 2023-24 tax year, you have until 30 December 2024 to file your online self-assessment returns to have the monies collected in the 2025-26 tax year starting on 6 April 2025. If you qualify to have your tax debt coded out then this is a good reason to deal with your tax return obligations as soon as you can, after the end of the relevant tax year.