Should you pay HMRC early?

September 14, 2015

Following my last blog post yesterday, somebody has asked me if it is possible to pay HMRC early.

I believe this is coming from a place of worry that by hording all the cash for a tax payment in the distance of time may prove slightly too tempting and it could be either eaten up by financing the business or used up on a holiday!

The answer is YES. You could even pay it in monthly installments. It just sits on your account until the tax bill is charged.

I do understand the reason behind why people would want to do it but remember, cash in HMRC’s account early will be earning interest for HMRC that you really should be earning yourself and whilst it is true that limited company deposit accounts won’t be earning much interest, there are ways of taking out money from your limited company to earn interest (it is easier if you are self employed).

So financially speaking, it is much better to make your money work for you but I do understand why some people do it.

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