As the legislative deadline approaches for the 2025 tax year, many accountants are working through what’s realistic for clients who still have income tax to settle.
For some, the path is clear. For others, cash flow constraints or timing issues mean they may not be able to fully settle their outstanding position with Tax Traders before the cut-off date (18 June).
If your clients fall into the second category, there is still an important step you can take.
Where full settlement isn’t possible before the deadline, the most effective action is to pay as much as possible to Tax Traders before the cut-off.
Even a partial payment can make a meaningful difference.
Any amount settled through Tax Traders within the legislative timeframe will reduce your client’s exposure to use-of-money interest (UOMI) and late payment penalties on their 2025 income tax position.
This approach allows you to minimise the cost impact of an underpaid position, even if it can’t be completely cleared in time.
The timing of these payments is critical.
Once the legislative cut-off has passed, Tax Traders is no longer able to assist with managing interest and penalties for the 2025 tax year. At that point, any remaining balance sits with Inland Revenue (IR), along with ongoing interest and potential late payment penalties.
Taking action before the deadline ensures as much of the position as possible is brought within the tax pooling framework, where costs can be managed more effectively.
For any remaining balance after the cut-off, your client will need to work directly with IR to arrange a payment plan.
By reducing the outstanding amount beforehand, you put your client in a stronger position when entering into that arrangement. This can help ease the overall cost and provide more manageable repayment terms.
The closer you get to the deadline, the fewer options are available. Even if a full solution isn’t immediately clear, starting the process now can still improve the outcome for your client.
If you’d like to talk through a specific client situation or sense-check the best approach, our team is here to help.