Sarah Pennells, Consumer Finance Specialist at Royal London, comments on the number of people facing debt issues due to self assessment tax bills.

Around 1.8 million taxpayers will turn to overdrafts this month to pay unexpected self-assessment tax bill amounts, according to research from Royal London.

Income tax receipts are expected to soar by around £35 billion by 2028/29 thanks to the phenomenon of fiscal drag, where rising incomes and frozen tax thresholds tip greater numbers of workers into higher bands. New research shows many find themselves landed with tax bills they can’t afford or hadn’t budgeted for.

Sarah Pennells, Consumer Finance Specialist at Royal London commented:

It’s worrying that almost two million people are resorting to their overdraft to pay their tax bill this year, especially when overdrafts can be an expensive way of borrowing.

People are also getting caught out by higher tax bills than they expect. If you’re going to struggle to pay this year’s tax, you may be able to set up a payment plan with HM Revenue and Customs, but one of the conditions is that you must be within 60 days of the payment deadline, so you must act quickly.

It’s equally concerning that there’s so much confusion about the self-assessment system almost 30 years after it was introduced, particularly about who needs to fill in a self-assessment tax return.  If you’ve had income that you’ve not been taxed on, the chances are you’ll need to fill in a self-assessment tax return – unless it’s something like dividend income from investments held within an ISA – which is tax free.

Full release: Nearly two million people face debt over self assessment tax bills this month

✉️ Nicki Parry, PR Manager, 07919 170 043 / Nicki.Parry@royallondon.com