As of April 2011, HM Revenue & Customs introduced a new optional method of paying self assessment tax and corporation tax using their ‘Managed Payment Plan’ (MPP). Put simply it is based on a firm agreement to pay a set amount each month and in doing so it will protect you from the normal penalties for paying late. Currently depending on your arrangements, most individuals pay their self assessment income tax in two separate payments in July and then any balance the following January. The MPP now allows you to spread the payments over 12 months split 6 months before your balancing payment due date and 6 months after. This split is the same for companies paying corporation tax, 6 months before and 6 months after your normal due date.

Who’s eligible?

• Any individual taxpayer making payments under self assessment (whether final payments or payments on account

• Companies under corporation tax self assessment (group companies or those already subject to quarterly installment arrangements will not be eligible).

What's involved?

In order to take advantage of a managed payment plan, you will need to:

• Have submitted your self assessment/corporation tax return for the period

• Have paid all previous tax or have time to pay arrangements already in place

• Make the payments by direct debit. The payments will be collected on the 15th of each month, spread symmetrically either side of the payment date.

In order to take advantage of a full 12 months to pay, you will need to make your self assessment and propose your plans by the following dates:

• October 31st if you are normally required to make payments on account on January 31st and July 31st

• July 31st if you only have a final January 31st payment to make

• Six months before the normal due date for payment if you are a company under corporation tax If you are interested in using a MMP next year, it’s advisable to keep on top of your bookkeeping this year, as the deadlines are very tight especially for corporation tax plans with the normal payment due date being nine months and 1 day following the year end (for small company profits).

It is also important to seek professional advice with any activity relating to tax and tax planning, to safeguard against any expensive interest charges and penalties.

If you require any further help or advice on the above, please click here to contact us.