Would you like to avoid paying interest on tax and reduce your “Box 3” income tax charge at the same time?
Would you like to avoid paying interest on tax and reduce your “Box 3” income tax charge at the same time? You can do so by applying for your provisional income tax assessment for 2018 today (rather than giving in to the temptation of procrastination).
Your provisional income tax assessment enables you to settle up your outstanding tax for the current fiscal year in advance. This may well work out favourably for you in a fiscal sense, as we will explain below.
By prepaying your outstanding taxes you will avoid having to pay interest on the tax you have already paid, which at a rate of four percent for income tax and eight percent for corporation tax could work out quite well for you. And this is not the only advantage to be had by applying for a provisional income tax assessment before the month of November is out. Income tax is levied on your “Box 3” assets on the basis of notional yield. The first of January is the reference date for fixing the value of the relevant assets. Your (pre) payment of income tax before year-end will reduce your “Box 3” assets, and your income tax charge with it.
Read our previous tips!