Making money off HMRC

[RichS]

I'm a normal regular employee paying tax through PAYE and then doing the annual self-assessment true-up.

So my latest brainwave as to how to stuff HMRC goes as follows. I received a ridiculous PAYE coding notice which was driven by a lump-sum I invested in my pension last year. They think I might do the same this year and so have adjusted my PAYE code so as to massively reduce the amount of tax I will pay each month.

Rather than correct the error of their ways, I am minded to let it roll, take the surplus salary (ie my underpaid tax they have not collected), and stick it in the bank. Of course next Jan I'll pay the tax I owe when I do my self-assessment form, but until then am I right in thinking there's nothing obliging me to pay my tax every month? Effectively HMRC gives you an interest free loan of your tax due, for up to 20 months.

I think I'm right in thinking you can nominate your PAYE code to be whatever you want it to be- so you can not pay ANY tax each month in theory and stump it all up at the end, as I say anything between 20 and 8 moths later. And I don't think you owe them interest, do you?

Only obvious drawback is the temptation to spend the "extra" salary instead of banking it.

Given I paid north of £35k last year in tax, it could be a nice earner, a few hundred quid at least.

Any thoughts welcome.

[Terminator X]

Afaik they tell you the code not t'other way round. We'd all have it so we pay no tax otherwise

TX.

[RichS]

But if I was self-employed I wouldn't pay it as I go along, so why should I just because I have a PAYE code. I think I phoned them up once before and they agreed to change the code. But you might be right.

[AdeTuono]

RichS said:

I think I'm right in thinking you can nominate your PAYE code to be whatever you want it to be- so you can not pay ANY tax each month in theory and stump it all up at the end, as I say anything between 20 and 8 moths later.

I don't think you are...(right in thinking)

[gtr2012]

RichS said:

But if I was self-employed I wouldn't pay it as I go along, so why should I just because I have a PAYE code.

I think you need to Google 'Payments on Account'.

[AdeTuono]

gtr2012 said:

RichS said:

But if I was self-employed I wouldn't pay it as I go along, so why should I just because I have a PAYE code.

I think you need to Google 'Payments on Account'.

Indeed. And having just paid mine, I can attest that you certainly can't (generally) defer your tax liability for 20 momths. Quite the opposite...

[Eric Mc]

If you overpay tax through PAYE, you will get it back later when you complete a Self Assessment form for the relevant year.

If you discover years down the line that you have overpaid tax imn previous years, HMRXC will only refund the last three tax years' worth of overpayments.

[New POD]

I thought it was going to be a thread about the Flat Rate VAT scheme for small traders. Worth an extra £1000 a year to my company, which I then pay Corporation Tax on so get to see a bit less of it.

[RichS]

Ooh well, it was worth a go... It did perhaps sound a bit too good to be true. Thanks all!

Edited by RichS on Saturday 16th February 17:45