Introduction to Tax Bill Payments on the Accounts in the UK

Introduction to Tax Bill Payments on the Accounts in the UK As a self-employed person, we must pay our income tax through the self-assessment. HRMC in the UK introduced something called payments on the accounts. They are the advanced payments towards your income tax. Unless your tax bill is less than £1000, or if you already have made 80% of your tax due payments, you are obliged to make payments to the HRMC twice a year, or actually even 3 times. By the 31st January in the tax year, you pay 50% of the prior year’s ability, knowing as the first instalment. Then, by the 31st June of the following year, you pay another 50%, knowing as the second instalment. And then, by the 31 January of the following tax year, you have to pay any remaining balance and the first instalment for the next year. It may sound complicated, but in simple words, each payment is the half of the previous year’s payment. Of course, the calculation of the actual income, deductions and discounts may be, and often is complicated, and it’s very advisable to use online calculators and income tax advisors to be sure that we don’t have any underpayments, or overpayments, which are also common. If you think, that you have overpaid your bill, I highly recommend contacting an income tax overpayment advisors on how to claim it back. As mentioned above, at the end of the next month we have another deadline for paying our income tax. After I do my return, I also like to check how much money I’ll have left. I found an after-tax income calculator very useful. You can find out how much money you have for your family, after your tax bill and national insurance contribution. You can set filters to even find out the amounts per month, per week, per day, and even per hour. It’s worth checking, just for the curiosity. On the other hand, if you know that your payments will be lower, there is a way to inform HRMC in advance to reduce your payments on the account. You can simply login into your HRMC account, or send a SA303 form to your tax office. This is an introductory article and I recommend reading further to get a deeper understanding of this matter. Contacting your tax advisor or an accountant is a good option too.