It’s Tuesday!
The perfect day to talk Tax.
Read this week’s short Tax snippet for doctors and dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – in fact, you can read it whilst the kettle boils for your morning coffee!
Pay all your tax on-time
Pay your tax on time and you avoid paying the interest issued by HMRC on late payments of tax.
For example: If you have a tax liability at the end of the year of £1,000, but don’t make the payment by 31 January, you will get charged:
- interest on the tax that was due
- 5% surcharge, if you still haven’t paid in 30 days (by 2 March)
This includes your Payments on Account
It is highly likely that you were also required to make a Payment on Account by 31 July.
Although your Payments on Account are a projection of future tax payments, if you don’t pay them, but tax becomes due, then interest will be charged in the following tax year.
For example: If you are due to pay Payments on Account of £500, but don’t make the payment by 31 July, should your tax liability for the following year be more than £500, HMRC will also charge interest on the missed Payment on Account.
It is only viable to miss Payments on Account if your tax situation has changed and you are confident that you won’t have tax to pay in the following tax year.
A better solution is to reduce your Payments on Account if you predict your tax will be less next year, but does require an up-to-date tax calculation based on real-time figures.