It’s that time of year again; time to make your self-assessment payment on account by 31st July. This process is aimed to help those who are self-employed spread the cost of their tax bill over the year rather than having to find a large lump sum all in one go.

Here are some questions we’re often asked about payments on account:

“What are payments on account and when are they due?” Payments on account are payments you’ll need to make twice a year if you’re self-employed, due by 31st January and 31st July, to go towards your tax bill which will be due on the following 31st January.

“How are the payments calculated?” The payments on account are calculated at 50% of last year’s tax bill, this assumes that profits have remained relatively consistent.

“Does everyone have to pay payments on account?”Payments on account will not be due in the following circumstances:

• If your tax bill is less than £1000
• If 80% or more of your tax due has been deducted at source (e.g. through PAYE)

“How can I pay my payment on account?”

You can pay using the following methods:

• Bacs
• Direct debit
• Cheque
• Online/telephone banking
• CHAPS
• At your bank or building society

The best way you can prepare for these payments on account is to have this information as early as possible, that way you have time to make a plan to save the right amount for when they become due. With this in mind, the best way to have this information as early as possible is to get all your records into your adviser as early as possible so that they can calculate it for you.

If we are your advisor, please send us your records. If you have any questions about payments on account please call us on 01872 300232 or email us at hello@hivebusiness.co.uk.