If you are registered under the self-assessment tax regime, it is crucial that you do not forget to make your second payment on account by July 31st or it could cost you money.
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. Note: Interest will be charged for late payment at HMRC’s rate, which is currently 3% per annum.
The payments on account are estimates based on the previous year’s tax liability, including any profit you made from renting out a property. 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 Haywood-Schiefer, assistant manager at London based accountants Blick Rothenberg, said: “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.”
He 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.”
If you are unsure whether there is anything to pay, Haywood-Schiefer advises that you contact your accountant or, if you do not have one, either access your online self-assessment account or call HMRC for the payment details.