Just a couple of days left to settle payments on account

Those who still need to settle their payments on account are being reminded that they have just a couple of days to do so.

There are two Payments on Account each year, due on the 31^st of January and the 31^st of July.

They are a way of making advance payments towards your tax bill for the following year; however, if your tax bill is less than £1,000 or you paid more than 80% of the previous year’s owed tax, then you won’t need to make this payment.

The amount you pay is a prediction of what HMRC expects you to earn, based on your last tax bill – and each payment is half your previous year’s tax bill.

If you expect to earn less, you (or your accountant on your behalf) can apply to have your Payments on Account reduced. However, if you end up underpaying, you will be charged interest.

HMRC encourages people to file their tax return early, as this will mean knowing in advance how much tax they owe and could result in being able to reduce their next Payment on Account if their income has decreased.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said, “Filing your tax return early, making payments on account and setting up a manageable payment plan are three simple steps you can take to help stay in control of your tax affairs, so why not tick off all these at once?

“The deadline for the next Payments on Account is due, and it’s the ideal opportunity to file your next tax return early and get a big chunk of tax admin crossed off your to-do list.”

To find out more about contracting, please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.