Taxman’s “Budget Payment Plan”

A new idea? The Taxman has recently been pushing his Budget Payment Plan (BPP). The idea was introduced a while ago but hasn’t really caught on, so he’s putting the word out again to see if there are any more takers. However, it seems to us that the scheme has a number of major flaws.

Limited application. BPPs are limited to personal self-assessment (SA) tax bills, and can be used only by people who don’t owe any tax at the time they apply to join the scheme. This restriction makes the Taxman’s stated purpose of helping to spread “the cost of paying tax over a period of time, rather than in one hit” rather contradictory. Those people who are already up-to-date with their SA tax payments are the least likely to need such an arrangement. It’s those who are falling behind that need help.

No interest. So, in essence, a BPP is just a scheme to put your cash into the Taxman’s bank account sooner. And to add the final insult to this injury he won’t pay you any interest while your money is “resting in his account”.

Tip. Don’t bother with a BPP! If you want to set aside money in advance for tax payments, and don’t want to be tempted into spending it, you would be better off opening an interest paying bank account for which someone you trust is the signatory rather than you.