Payment on Account
‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).
You have to make 2 payments on account every year unless:
- Your last tax bill was less than £1,000.
- You’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings.
Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.
If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.
Last year, as a result of coronavirus, HMRC gave individuals the opportunity to defer their payments on account until January 2021. This meant that many individuals, although had the benefit of delaying the payment in July, had large Tax bills due in January.
This year, there are no opportunities to defer the July payment. Therefore, any payments on account must be paid by 31st July 2021.
Reduce Payments on Account
If you know your tax bill is going to be lower than last year, you can ask HM Revenue and Customs to reduce your payments on account. Please discuss this with your accountant if you believe your income will be lower in the year. If the payment on account is reduced, and it turned out that more Tax is due, interest will be charged on the difference.
Chippendale and Clark always review the individuals details as part of their personal tax checklist to see if they are eligible to reduce their payments on account.
Check Your Payments on Account
You can check your payments on account online using the following details:
- Sign in to your online account.
- Select the option to view your latest Self Assessment return.
- Select ‘View statements’.
For Chippendale and Clark clients, we will be emailing you individually how much your payment on account is, and how to make this payment. If you are unsure, please contact the office where one of our advisors will be able to assist you.
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