HMRC has set a deadline of July 31 for self-assessment taxpayers to file their second Payments on Account. These are payments towards your next tax bill, including Class 4 National Insurance if you are self-employed. They help spread the cost of your tax by making payments in two instalments, each half of the tax you owed last year. Payments are due by midnight on January 31 and July 31.
Who Needs to Make Payments on Account?
You must make these two payments unless the amount of tax you owed last year was less than £1,000, or you paid more than 80% of the tax you owed outside of Self Assessment (for example through your tax code or because your bank had already deducted interest on your savings). Your Self Assessment statement or online account will show you how much you need to pay.
HMRC Offers Support
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.”
How Payments on Account Are Calculated
Payments on account are calculated based on your estimated earnings, usually the amount you earned the previous year. Each payment is typically half of the tax you owed the previous year. If you actually earn more than estimated, you may still have tax to pay on top of your payments on account, known as a ‘balancing payment’.
Advice from Experts
Andrew Bartlett, chief executive of Advice Direct Scotland, added: “Paying a tax bill isn’t the first thing on most people’s minds during the height of the summer, which is why it is so easy to miss this particular HMRC deadline. However, if you forget about it, late payment fines will start to build up – so make sure you log in to your online account now and check if you need to act. If your situation has changed and you expect you will be liable to pay less tax than previously, make sure to ask for a reduction, which will keep the money in your pocket.”
