Self-assessment: Do you need to make a payment on account this summer?

Tax return for 2019

If you are required to complete a self-assessment tax return each year, then you may also need to make a second payment on account before the 31 July towards your tax bill. Not sure if you have to do this? Here’s what you need to know.

What are payments on account?

‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You will be required to make 2 payments on account every year unless:

  • your last Self Assessment tax bill was less than £1,000
  • you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

Each payment is half your previous year’s tax bill. Payments are due by midnight on 31 January (the date you probably already know about) and 31 July.

 

How is it calculated?

Your tax bill is calculated on what you stated you earnt in your previous year’s tax return.

If your income has significantly fallen, you may be able to reduce your payment on account to reflect your lower earnings. You can either do this online by logging in to your self-assessment account or contacting HMRC by post.

Be careful if you do this though as you don’t want to miscalculate and end up with a tax shortfall, potentially incurring interest.

Similarly, if your earnings increase, then you will have a balancing payment due on the 31 January.

You can find an example of how HMRC calculate payments on account on their website.

 

Do I need to make a second payment on account?

Check any correspondence you received from HMRC. They will have written to you following your January payment with details of how to make a payment on account this Summer.

You can also log into your self-assessment account online and check there:

  1. Sign in to your online account.
  2. Select the option to view your latest Self Assessment return.
  3. Select ‘View statements’.

You’ll then be able to see:

  • payments on account you’ve already made
  • payments you need to make towards your next tax bill

 

HMRC guidance

You can get further guidance on understanding your self-assessment tax bill on the HMRC website.

There is also information on how to get help with your tax on the gov.uk website here.

 

Further information

If you found this information useful, you may also want to check out the following:

 

MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, taxation, debt management, savings and investments, lifestyle planning and much more.

Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.

Sources:

https://www.gov.uk/understand-self-assessment-bill/payments-on-account

https://www.gov.uk/government/publications/self-assessment-claim-to-reduce-payments-on-account-sa303

https://www.access.service.gov.uk/login/signin/creds

https://www.gov.uk/understand-self-assessment-bill

https://www.gov.uk/tax-help