Thousands of self-employed people have just days to pay the second instalment of their tax bill as the self assessment deadline approaches. HMRC will apply a 7.75% late payment interest rate from 1 August, marking the first major tax deadline under new Labour Prime Minister Andy Burnham, who succeeded Sir Keir Starmer earlier this month.
Payment on Account Deadline: 31 July
The second payment on account date is Friday 31 July each year, and it must be paid to HMRC by midnight. This instalment covers part of the current tax year's liability. Taxpayers must ensure their debt is settled by the deadline or face what one expert calls an “excruciatingly high” interest rate.
Tom Goddard, assistant manager at audit and tax firm Blick Rothenberg, warned that failing to pay on time could lead to significant extra costs. HMRC's late-payment interest rate currently stands at 7.75%, meaning someone who failed to pay an £800 bill could owe approximately £862 after a year, assuming the rate remains unchanged.
How the Second Payment Is Calculated
According to One Outsourcing Solutions, each client's second payment is normally half of their previous year's total liability, including Class 4 National Insurance for self-employed individuals. The figure should match the SA302, the most recent self-assessment statement, and the online account. If there is a mismatch, it may be due to an amended statement, a later submission, an HMRC adjustment, or a misallocation of an earlier payment. The firm advises addressing discrepancies before payment, not after.
However, not everyone is required to make a second payment. Clients do not have to pay if their bill was £1,000 or less last year, or if 80% or more of the bill was collected at source. One Outsourcing Solutions recommended verifying directly with each impacted client to avoid confusion.
Support Available for Taxpayers
Myrtle Lloyd, HMRC's Chief Customer Officer, said: "We know managing a Self Assessment tax bill isn't always straightforward and we are here to help. From paying instantly via the HMRC app to spreading the cost through a payment plan, there's support available for every customer. Search 'Pay your Self Assessment tax bill' on GOV.UK to choose the payment option that works for you."
Interest will begin to accrue from 1 August on any outstanding balance. This deadline is the first under Prime Minister Andy Burnham, who took office earlier this month. Taxpayers are urged to act promptly to avoid the 7.75% charge.
