24th July 2023One week to go until the second ‘payments on account’ deadline – What self-employed taxpayers need to know

The second ‘payments on account’ deadline is on July 31st. With only one week to go, Stevie Heafford, Tax Partner outlines what ‘payments on account’ are and who needs to complete this tax return.

What are ‘payments on account’?

For those who are self-employed, payments on account are a requirement. This means you must make advance payments for your tax bill in two instalments during the year (this includes Class 4 National Insurance for the self-employed).

These payments are calculated from the bill of your previous tax year. The first payment was due on January 31st and is to be followed by the second self-assessment return – due by midnight on July 31st.

Ways to make your payment

• In your bank or building society – if you still receive paper statements from HMRC
• Bank transfer or direct debit – however, it is advised you plan this in advance to avoid any transfers being received after the deadline
• Online using a debit or corporate credit card
• With a cheque via the post

Does this deadline apply to you?

The deadline applies to all those who are self-employed unless:

• You owe £1,000 or less as this can be made in a single payment on the first return
• You have already paid more than 80% of the tax you owe

How to reduce your payments on account

• Speak to your accountant – they will likely have agent authority and be able to reduce your payment on account on your behalf
• For those who do not have an accountant with agent authority in place, you can send your SA303 form by post to the tax office
• You can also use the ‘reduce payments on account’ section online in your Personal Tax Account

Heafford adds: “Late payment interest rose to 7.5% this month, making it even more important for individuals to file their return on time. If this deadline applies to you, you still have time to arrange your second payment, and if you don’t think you can make this payment, make sure to get in touch with HMRC to try to set up a Time to Pay arrangement.”

To discuss specific circumstances, please get in touch with Stevie Heafford, HW Fisher Tax Partner.