The law has just been changed. Provisional taxpayers will be permitted to take a PAYE salary and still remain provisional taxpayers.
Some people have been doing this already, but it has never been entirely correct.
If you are a shareholder employee of your company and want to get some of your tax paid as you go, you can be an employee of your company and come into the PAYE system. Any profits left over at the end of the year can still be credited to you in the usual way.
However, the profits will be much smaller and although you will still have to pay provisional tax and year-end tax, the amounts will be much less daunting.
You should note if you do put yourself on PAYE, you must continue with a PAYE salary for the life of your company. You cannot change your mind and be a full provisional taxpayer again.
This doesn’t mean you have to continue with the same amount of salary. If the company is not performing too well, it's logical to reduce your pay.
You should also note you will have to guess your provisional income in the year you make the change to a PAYE salary. If you underpay the provisional tax, Inland Revenue will require use of money interest at a rate more than 8% a year.
If the company makes a loss as a result of your PAYE salary, you will not be able to reduce your income by the amount of the loss unless your company happens to be a look through company. The loss will be locked into the company until it can be set off against profits in future years.
There has been no provision for allowing a self-employed person to have a PAYE salary. If you are one of these, the best thing you can do is make monthly payments in advance into your account at Inland Revenue, which is not entirely satisfactory.