One month until Payments on Account deadline

Taxpayers are being reminded that they have just one month to prepare for the Payments on Account deadline.

How Do Payments on Account Work?

Payments on Account are a way of making advance payments towards your tax bill for the following year.

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.

There are two deadlines each tax year – one is due on the 31^st of January and the second on the 31^st of July. 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.

If you expect to earn less, you (or your accountant on your behalf) can apply to have your Payments on Account reduced. However, it’s worth noting that 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.

Spreading the Costs

It is possible to spread these costs if needed, with taxpayers able to set up monthly or weekly payment plans, and any payments already made via these plans will count towards their next self-assessment tax bill.

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.”

For more information, please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.