The July deadline is an important date for many people who pay tax through Self Assessment. Although the January filing deadline receives more attention, taxpayers who make payments on account may need to make a second payment by midnight on 31st July. Preparing early can help you understand how much you owe, protect your cashflow and avoid interest on late payments. A professional tax advisor in Camberley can review your position and provide clear guidance before the deadline arrives.
What Are Payments on Account?
Payments on account are advance payments towards your next tax bill. HMRC normally divides the amount into two instalments, with the first due on 31 January and the second due on 31st July.
Each instalment usually equals half of the relevant tax liability from the previous year. These advance payments do not necessarily settle your final liability. HMRC calculates any remaining balance after you submit your next tax return.
Who May Need to Pay?
Payments on account generally apply when your previous tax bill exceeded £1,000 and you paid less than 80 per cent of the total through PAYE or another deduction at source.
The July deadline may affect people who receive income from self employment, freelance or consultancy work, rental property, dividends, investments or other sources that HMRC does not tax before payment.
You can check your Self Assessment statement or online HMRC account to confirm whether a payment is due. Your statement should show previous payments, upcoming payments and any outstanding balance.
What If Your Income Has Reduced?
HMRC usually calculates payments on account using the previous year’s liability. However, your current income may have fallen because of lower business profits, reduced rental income or changes to your personal circumstances.
You may apply to reduce your payments on account when you reasonably expect your liability to be lower. However, you should calculate the reduction carefully. HMRC may charge interest if you reduce the payment too far and later owe more than expected.
A tax advisor can review your expected income and help you decide whether requesting a reduction would be appropriate.
Why You Should Prepare Before the Deadline
Leaving your payment until the final days of July can create unnecessary financial pressure. Reviewing your position early allows you to confirm the amount due, check that HMRC has recorded earlier payments, review your expected annual income, consider whether a reduction may apply and prepare your cashflow for the payment.
HMRC allows taxpayers to pay through several methods, including online banking, Direct Debit and the HMRC app. Some payment methods take several working days, so it is important to allow enough time.
Speak to Maratax
Maratax provides professional tax guidance for individuals and business owners in Camberley, Mychett, Farnborough and Fleet. We can review your payments on account, estimate your likely liability and help you understand the steps you need to take.
Contact Maratax before 31st July for clear support from an experienced tax advisor in Camberley.
