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TAX TIP TUESDAY: July Payment On Account Reminder

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

The 31st of July is an important date to remember for your tax-related responsibilities. Today we’re sending out a friendly reminder about your July Payment on Account.

Payments on account

Here’s how the UK self-assessment tax system works:

Along with settling the previous year’s tax liability in January each year, you are also required to make payments on account towards the next tax year, which is actually the current tax year.

It might sound slightly confusing, but because there’s such a large gap between when your money is earned and when you pay tax on it, it’s just HMRC’s way of ensuring they’ll get paid.

Every year, you’ll take care of one of these payments on account along with your tax settlement in January. The other is due by 31 July.

While there is no penalty fee associated with late payments on account, it’s best not to delay getting what you owe to HMRC and remember to make your payment on account on time.

If a payment is due and you fail to make this payment on account (POA) within 30 days, interest may be added, which can certainly add up on a substantial tax bill. The interest is designed to ensure that you don’t gain any benefit from late payment.

However, if your income or profits have declined this year and you think your tax bill may be lower come January, there is a formal process you can use to reduce your July POA. You’ll need to work with your accountant to prepare either draft financial accounts, or a draft tax estimate.

How to pay

Since 31 July is tomorrow, you’ll be limited to using one of the payment methods for the “same or next day” options. But if you’re better prepared next time around, you have a few more ways to pay.

Same or next day

  • online or telephone banking
  • by debit or credit card online
  • at your bank or building society – a paying-in slip from HMRC is required

3 working days

  • BACS
  • Direct Debit (if you’ve set one up with HMRC before)
  • By post, with a cheque

5 working days

  • Direct Debit (if you haven’t set one up with HMRC before)

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