As the end of July is fast approaching it may well be time for you to make your second payment on account towards your 24/25 tax liability. So we just wanted to give you some more information about your payment:
A reminder of what payments on account are
Payments on account are payments in advance against your future tax bill, including National Insurance Class 4 if you are self-employed.
You are required to make a payment on account by 31st January and 31st July each year unless the following applies:
- Your last self-assessment tax bill was no more than £1,000
- You’ve already paid more than 80% of all the tax you owe through your tax code (on any employment income)
Each payment on account is half of your last year’s tax liability as HMRC makes the assumption that your income will remain consistent (or close enough) from one year to the other.
Can payments on account be changed?
Yes, but only if you know that your income has reduced/ will reduce in the next year, for example if you have incorporated or if one of your revenue streams has ceased. These can either be reduced by telling HMRC or by submitting your next year’s return before the payment in July is due. Any over reduction of your payments on account will result in interest being charged and potentially penalties incurred so you should only reduce them if you are sure.
How to pay
Payment of your July payment on account is done in the same way as your January tax payment with the same reference number and there are a few options of how to pay which can be found here. If you are unable to make the payment in time you should call HMRC as soon as possible to make a time to pay arrangement (don’t just not pay).
If you are unsure about any of the above, whether it be how much you need to pay or whether you can reduce your payments on account, then please don’t hesitate to contact us and we will be happy to help.
