Payments On Account

The payments on account are made in two instalments and are based on the tax liability of the previous tax year. Each instalment is typically equal to half of the previous year's tax liability. These payments are due on two specific dates: January 31st (which is the same deadline for filing the previous year's tax return) and July 31st of each tax year. 

 

The purpose of payments on account is to ensure that individuals pay their taxes in advance, rather than in a lump sum at the end of the tax year. This helps to spread the tax liability across the year and reduces the risk of individuals falling behind on their tax payments. It also helps HMRC collect tax revenue more regularly throughout the year. 

 

It's important to note that payments on account are based on an estimate of the following year's tax liability. If an individual's income is expected to be significantly higher or lower in the upcoming tax year, they can apply to adjust the payments on account accordingly. Additionally, any excess payments made through payments on account will be credited towards the individual's tax liability for the following tax year or refunded if the amount exceeds the final tax liability. 

 

Full Payments On Account information as issued by HMRC 

 

 

For further advice applicable to your circumstances please contact us.