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Self Assessment Tax payments on account

What are ‘payments on account’? 

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


What triggers the need for payments on account?

HMRC require that individuals pay on account towards their income tax bills when:
– their tax bill is over £1,000.
– more than 20% of the bill total for the year is owed (i.e. it hasn’t already been deducted via PAYE).


How is the payment on account calculated and when are payments due?

Each payment on account is half of the previous year’s tax bill.

So if the 2013-14 tax bill was £1,000 that will trigger payments on account of
1) £500 due by 31st January 2015
2) £500 due by 31st July 2015


What is not included in the payment on account?

The payments do not include any capital gains tax due or student loan repayments. These will become due (if applicable) by 31st January the following year (so 2016 in the example above) as a ‘balancing payment’.


Can payments on account be reduced?

Yes, if you feel that your next tax bill will lower than the previous year you can apply to reduce your payments on account to reflect your estimate of the next bill.

Log into your HMRC online account and click ‘reduce payments on account’.

Be careful with this though. If you under-estimate your payments on account HMRC can apply interest to any tax paid ‘late’ if it turns out that their original estimate was more representative.


How can I check my payments on account?

Log into your HMRC online account and click ‘view statements’ to see:

– payments on account you’ve already made on account.

– payments you still need to make towards your next tax bill.


If you need assistance completing your next self assessment return please contact me.

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