Self-Assessment Payment on Account
HMRC expect Payment on Account.
The assumption is that the current Income and Tax Liability will be the same in the following year so HMRC expect a payment on account.
For Example in the illustration below.
If the Tax liability was £1,125 for the Tax Year 2022-2023, which is due by or before 31 January 2024 then HMRC would also expect the following
Tax Year 2022-2023 £1,125
Tax Year 1/2 payment on account 2023-2024 £562.50
Total due by 31 January 2024 £1,687.50
Tax Year Second 1/2 payment on account 2023-2024 £562.50 due 31 July 2024
Please note then when completing the Actual Tax Return 2023-2024 this will determine whether under or over paid tax.
There are some reasons when payment on accounts are usually not required
- If paid at least 80% tax through employment income
- If there is tax refund in the following year after offsetting the payment on account and the tax liability is less than £1,000 then no following payment on account
- A reasonable reason such as income expected to be lower in the following Tax Year and therefore, the Tax Liability will be less
Please note that if the Tax Liability is similar or higher or resulting in tax over £1,000 then HMRC will be applying late Interest on when the payment on accounts should have been arranged
If you would like to discuss further and require assistance with your Tax Return
Please feel free to reach out.
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