An early payment discount is available for people who:
-
are new in business
-
haven’t begun to pay provisional tax
-
made payments within the corresponding income year up to their balance date, for example, a standard balance date taxpayer, who has made a payment or payments on or before 31 March 2019 as income tax for the period 1 April 2019 to 31 March 2020.
The discount is calculated at the rate of 6.7% of either:
-
the amount paid during the year, or
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105% of your end-of-year residual income tax liability,
whichever is the lesser, and is credited against your end-of-year tax bill.
To check if you qualify, work through the flowchart below.
Do you qualify for an early payment discount?
Terms Inland Revenue use:
|
Term |
Meaning |
|---|---|
|
Provisional tax |
This is tax paid in instalments during the year, based on what you expect your income to be, or what it was last year. |
|
Assessable income |
Income that is not exempt income or excluded income (for example, a government grant to a business). Assessable income includes undeclared business income you may have earned (for example, cash jobs). |
|
Year |
As referred to in the diagram on the next page, year means the standard tax year from 1 April to 31 March, unless you have an approved different balance date, in which case your income year will end then. |
If you have any questions about your entitlement to the discount, please contact Inland Revenue.
