Want to save tax this year? Read this week’s short Tax Tip, tailored for UK doctors and dentists to help you save money and get more organised with your tax affairs. Take 5 minutes to have a read.
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.
Payments on account
The UK self-assessment tax system is such that as well as settling last year’s tax liability in January each year, you are also required to make payments on account towards the following tax year, which is actually this tax year.
One of these payments on account you will already have paid, along with your tax settlement in January. The other is due by 31 July.
Failure to pay this payment on account (POA), if it is due, may result in added interest.
However, if your income or profits have reduced in the year to 5 April 2017, and you think your tax bill may be lower in January 2018, then you can take steps to reducing this July POA.
To do this you need to speak to your accountant to prepare either draft financial accounts, or a draft tax estimate.
There is a formal process to reducing your POA which they can help you with.
Read more:
Why do you have to make Payments on Account?
Can you reduce your Payments on Account for Cash Flow?
How to Pay
Although you have a couple of weeks left, it is important not to forget. Whilst there are no surcharges that apply for the POA, as does the tax payment in January, paying on-time keeps you in the “good books” with the taxman.
HMRC make it easy for you to pay your tax and there are lots of options. At the moment, you can use any of these methods to make your tax payment, although closer to the deadline some options become limited.
Same or next day
- 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
- at the Post Office – 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)
Need further advice?
Specialist accountant, Michael Lansdell, can answer any tax questions you may have regarding your 2015/2016 tax return, as well as help you start tax planning for the current year ended 5 April 2017.