Unpaid tax demand - pay now or wait until January

BossBob

I’m lucky (or planned well) in that I have a number of private pensions but they take me over the personal tax allowance when combined with my state pension. HMRC seem unable to calculate in year what the total would be and hence I’ve just received a tax demand for ~£1300 of unpaid tax from 2023/24. Should I pay this straight away, or, as I’m more inclined towards, keep the money in my savings account until January 2025 and earn the interest on it?

SacredStephan

BossBob said:

keep the money in my savings account until January 2025 and earn the interest on it?

I'd get the four months of interest and pay the taxman w/c 27th Jan, but not on Fri 31st when the HMRC website is most likely to fall over.

saajan_12

What does the demand state? If it gives a date you must pay it then you have to follow that - if not, the penalty interest rate wouldn't be worth it. They may adjust your tax code so you pay it monthly instead of waiting for a lump sum. However if you're allowed to wait then why not. Interest rates are not negligible currently. 

BossBob

The demand says to pay by the end of January 2025 so that is what I’ll do. The money will sit in my savings account until then.