If an individual’s tax liability is less than £3,000 and they have a source of PAYE income, early filing of a tax return by 30 December means that the outstanding tax bill can be collected through a PAYE tax code.

Stefanie Tremain, a partner at Blick Rothenberg said: ‘Most people are aware that the normal filing deadline for a self-assessment tax return (and to make any payments due) is 31 January, which means 2022/23 tax returns and tax payments are due by 31 January 2024.

‘What is less well known is that if your tax liability is less than £3,000 and you have a source of PAYE income (eg, employment or private pension income), and your tax return is filed by 30 December, your tax can be collected through your PAYE code in the following tax year.

‘For example, if you owed tax of £2,500 for 2022/23, you would either need to pay this in full by 31 January 2024, or HMRC could take a deduction from your pay in 12 instalments, starting in April 2024.

‘This can be a huge boost to cashflow at what is already an expensive time of year.’

Taxpayers need to make sure that they have enough PAYE income in the relevant year to collect the additional tax, and make sure they would not end up paying more than half of their income in tax.

‘For any taxpayers filing their own tax returns who would like to take advantage of this, HMRC should do this automatically when they process your return, provided you leave the relevant box unticked,’ added Tremain.