If you are under the self-assessment tax regime, don’t forget to make your second payment on account by July 31st or it could cost you money.
Paul Haywood-Schiefer, assistant manager at Blick Rothenberg, said: “Individuals completing annual Tax Returns within the self-assessment regime and making payments on account will need to make their second payment on account by 31st July 2016. This will apply mainly to those receiving rental income and the self-employed, but those with large amounts of investment income may also have a payment to make.”
Payments on account are only for people who complete Tax Returns each year, but not everyone who completes a Tax Return will necessarily have a payment to make. HMRC should send out statements with a payslip to show the amount due. However, sometimes people have elected for the statement to go to their agent, or the individual may not have advised HMRC of a change of address.
Paul advised: “If people are unsure whether there is anything to pay, they should contact their accountant or, if they don’t have one, either access their online self-assessment account or call HMRC for the payment details.”
The payments on account are estimates based on the previous year’s tax liability. For the payment due by the end of this month, it will have been based on the individual’s tax liability for the year ended 5 April 2015 and is a prepayment for the tax year which ended 5 April 2016.
Paul added: “If the person knows their income was lower in the tax year to 5 April 2016, now would be a good time to go over the figures for that year as it may be that the payment on account could be reduced.”
Commenting on missing the payment deadline, Paul warned: “If the payment isn’t made by 31st July, interest will be charged at HMRC’s rate, which is currently 3% per annum.
“The 31st July actually falls on a Sunday this year, so it would be a good idea if you are sending a cheque to ensure it gets there by Friday 29th July, to avoid an automatic charge of a day’s worth of interest.”
He added: “If you miss your payment deadline, don’t be surprised if you receive calls or letters from the debt collection team, as HMRC are chasing outstanding tax amounts to a greater extent than before. It might be possible to arrange a time to pay agreement, but individuals should speak to HMRC as soon as possible if they are having problems finding the money to pay, and ideally before the deadline has passed.”