Tax loans and instalment loans comparison

It's common knowledge that employees in Hong Kong get taxed on their salary. According to the Inland Revenue Ordinance, salaries tax, profits tax and property tax are types of direct tax.

So what's a personal assessment? Instead of a tax levy, a personal assessment is a form of tax relief for individual taxpayers who face profits tax and property tax. This can also include sole proprietors, business partners and property owners.

If you have income that's subject to profits tax and/or property tax, submitting a personal assessment may give you some tax relief. Your salary, business profit or loss, and rental income will be aggregated and this can reduce your tax bill.

But if you're only charged salary tax and have no other income streams, you won't benefit from a personal assessment.

According to the Hong Kong government's eTAX portal, the salaries tax you owe can be calculated in the following ways, whichever is lower. You can also use the Inland Revenue Department's tax calculator.

Every tax season, HSBC offers special tax loan schemes that can give you financial flexibility.

The most common fixed loan schemes include instalment loans, tax loans, and credit card cash instalment plans. Their repayment periods, loan amount limits and fees vary to meet different goals and needs.

As the name suggests, tax loans are personal loans from banks during tax season to offer taxpayers better liquidity. Personal loans have a speedy approval process and usually come with a lower interest rate during tax season.

A personal instalment loan, on the other hand, is available all year round for any large financial needs.

Both types of loans accept monthly instalment repayments starting from 6 months.

Usually, no. Personal assessment is a tax relief option. It’s mainly for profits tax and property tax. People who run a business or earn rental income might use it. If your only income is from your employer, you only need to pay salaries tax.

If you have business profits or losses, or rental income, personal assessment may help you pay less tax.

You can compare tax loans and instalment loans by looking at three key factors: timing, purpose, and how the money is paid.

Timing means the application window. Tax loans are usually available only during tax season, often from October to February. Instalment loans are available all year.

Purpose means what you need the money for. Tax loans are mainly for paying your tax bill, though you can also use them for other needs. Instalment loans are for larger expenses, such as home renovation, education, weddings, or medical bills.

Payout means how you receive the money. Tax loans are often paid in two parts to match the first and second tax payment dates. This can help if you also need some cash for daily spending. As for instalment loans, some banks offer loan redraw service, which can work well for longer-term financial planning.

In short, a tax loan may suit you if your main goal is to pay your tax bill on time, take advantage of tax season offers, or receive the money in stages. An instalment loan may be a better choice if you want more flexibility in timing, purpose, or repayment.

Paying tax late can lead to penalties, extra charges, and sometimes legal action. Check the latest guidance from the Inland Revenue Department for full details.

To avoid late payment, learn the difference between tax loans and instalment loans before tax season starts. Having extra cash on hand can help you pay on time with more confidence.

To find out more about HSBC personal loans, feel free to call us on (852) 2748 8080, or apply online now.

To borrow or not to borrow? Borrow only if you can repay!