Payments on Account: Self Assessment Tax Reminder
As the deadline for Payments on Account for Income Tax nears, it’s essential to understand your obligations. At Nichols & Co, we aim to provide clarity on your tax responsibilities and help you meet the necessary deadlines. This article outlines who needs to make them, and offers guidance to ensure prompt compliance.
Understanding Payments on Account
For individuals filing Self-Assessment tax returns, Payments on Account are advance payments toward their income tax bill. These instalments help manage tax liabilities effectively, with deadlines on January 31st and July 31st.
Who Needs to Make Payments on Account?
Payments on Account aren’t mandatory for everyone. Exemptions include:
- Previous Tax Bill: If your last Self-Assessment tax bill was less than £1,000, you may be exempt.
- Payment Percentage: If you have already paid over 80% of the previous year’s tax through your tax code or other means, you might be exempt.
- Application for Reduction: In certain cases, individuals can apply to reduce Payments on Account to nil via Self-Assessment.
Check Your Self Assessment Tax Return
If Nichols & Co prepared your Self-Assessment for the tax year ending on April 5th, 2022, check the covering letter we sent for specific details on Payments on Account. For clarification or assistance, reach out to your client manager or call us for guidance.
If you have a different accountant, you should have received your tax calculation when your Self-Assessment was completed, this would usually state the details of your payments and when they’re due. If you are unsure, make sure you contact your accountant to confirm.
Accessing Your Online Account
For detailed information and access to your online account, visit gov.uk. This official government website provides comprehensive resources for taxpayers, ensuring transparency and clarity.
Important Note about Balancing Payments
Payments on Account do not cover capital gains or student loans (for self-employed individuals). These balances are part of the ‘balancing payment,’ due in January. Consider these additional liabilities when planning your tax payments.
Avoid Late Payment Interest and Penalties
Timely payment is crucial to avoid late payment interest and penalties from HMRC. Delays can lead to financial burdens. If you face challenges meeting the deadline or have uncertainties, speak with your accountant as soon as possible who may be able to help.