By the end of July, millions of people across the UK who complete an annual self-assessment tax return will be required to pay their second payment on account.
Under the payment on account system, taxpayers must effectively make advanced payments towards their Self-Assessment tax bill, which are paid twice annually on 31 January and 31 July.
Each payment is half the previous year’s tax bill and is based on the estimated tax charge calculated by HM Revenue & Customs (HMRC) based on a taxpayer’s previous tax return.
Where a person is unable to completely pay off their tax bill after they have made both payments on account will need to make a ‘balancing payment’ by midnight on 31 January in the following year or face a penalty.
Remember, if a tax bill is paid late in interest will accrue on the amount that is owed, meaning more will need to be paid at a later date.
Given the challenging year that most taxpayers have had to contend with, this second payment on account in July may be more challenging for many individuals this year.
In many cases, taxpayers will have seen a drop in income and profitability in the 2020/21 tax year. If this is the case then it may be possible to inform HMRC of this by submitting their next self-assessment tax return early.
Although the final deadline for self-assessment is 31 January 2022, should they wish, taxpayers can submit up to date information now and HMRC should adjust their tax bill accordingly – reducing payments if necessary or potentially offering a rebate if a person has paid too much.
If a taxpayer is really struggling with the burden of their tax bill, they can also request a time to pay arrangement with HMRC, which may allow them to spread their tax payments over a longer period.
However, in order to access this help, taxpayers need to take action sooner rather than later. If you would like to help with your tax bill, please contact your Seymour Taylor representative today or email email@example.com or call 01494552100.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 26 July 2021.