The deadline to take care of your annual “payment on account” tax bill is quickly approaching. Sunday, 31 July is the deadline for payment, so it’s essential to act now.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Payments on account
Payments on account are advance payments towards your tax bill, which include National Insurance if you’re self-employed, as many doctors are. You’re required to make two payments every year unless your last Self-assessment was less than £1,000 or you’ve already paid more than 80% of the tax you owe.
The payments are due by midnight on 31 January and 31 July. Your January payment usually covers the previous year’s liability as well as the current tax year. It might be a bit difficult to wrap your head around, but because there’s such a large gap between when your money is earned and when you pay tax on it, it’s the only way for HMRC to ensure they’ll get paid.
While there are no fees or surcharges 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), interest may be added, which can certainly add up on an already substantial tax bill.
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 on a Sunday, you’ll actually need to ensure your payment is submitted by Friday the 29th — unless you’re paying by Faster Payments or via debit or credit card. Depending on how much time you have before the deadline, there are options for payment available.
Same or next day
- through your online banking account
- online or telephone banking
- CHAPS
- 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)
As the deadline approaches and more people attempt to make their payments, services can be impacted and slow down. Ensure there are no issues and pay as soon as you can.