If you pay tax as you earn, then you will pay it every month and you will not have to worry about it.
This makes paying it simple and affordable. However, if you have income form other sources, then
you will be sent a tax bill directly from the Inland Revenue.
Tax has to be paid in January and in July. For example, if you complete you 2011-2012 tax return in
April and send it out, then they will send you out a letter telling you how much you owe and when
to pay it. They will ask for what you owe to be paid in full by January 2012, but they may also use
the bill to guess what you might owe for the following year. They may then charge you some in
arrears in July. This means that you might have two bills in the year.
If you pay the bill straight away, there is no chance of it being forgotten. You do not get reminders
and so if you do not pay the bill on time you will face a fine. It is never worth getting one of these
and so if you think that you are the type of person that is likely to forget to pay the bill, if you do
not get it done immediately, then pay it. Get it done as soon as you receive it.
Another good circumstance to pay it immediately is if you have the money to do so, but know there
may be a risk that you will not have that money in the future. This could happen if you know that
you tend to spend money as soon as it arrives in the bank or have some bills to pay. It is wise to
therefore, spend the money on the tax bill, in this situation, because you do not want to risk getting
a fine for not paying.
However, if you get your tax form in very early, then you will get a bill very early. It can be better
to wait to pay it until nearer the deadline. This is because you will be able to earn interest on
the money in the meantime. This is better than giving it to them and they earn the interest on it.
However, you do have to be sure that you will have the money still by the deadline and that you
will remember to pay your bill.