If you’re required to submit a self‑assessment tax return, your bill for that year becomes due on 31st January following the end of the tax year.
Tax years run from 6th April to 5th April. So for the tax year ending 5th April 2024, both your return and your bill are due by 31st January 2025. On this date, you’ll need to pay any income tax, National Insurance, or Capital Gains Tax owed for the year.
Payments on Account
If you have income that isn’t taxed at source - for example, if you’re self‑employed or receive rental income - you may be asked to make payments on account. These are advance payments towards your next year’s tax bill.
You won’t need to make payments on account if:
- Your tax due is less than £1,000, or;
- More than 80% of your tax liability has already been collected at source (e.g. through PAYE).
If payments on account do apply, you’ll make two instalments:
- The first on 31st January (alongside your tax bill).
- The second on 31st July.
Each payment is half of your previous year’s tax bill.
Example
Let’s say your tax bill for the year ending 5 April 2024 is £10,000.
- By 31st January 2025, you’ll pay your £10,000 bill plus a first payment on account of £5,000.
- By 31st July 2025, you’ll make a second payment on account of £5,000.
When you submit your return for the year ending 5 April 2025, you’ll already have paid £10,000 towards it. If your actual bill is higher or lower, you’ll make a balancing payment (or receive a rebate), along with new payments on account for the following year.
Reductions and Penalties
If your circumstances change - for example, you move from self‑employment into employment - you can ask HMRC to reduce your payments on account. Be cautious, though: if you reduce them too far, HMRC may charge interest on the shortfall.
Missing a payment deadline will also trigger penalties:
- More than 30 days late: 5% of the unpaid tax.
- More than 6 months late: another 5%.
- More than 12 months late: a further 5%.
That’s a total of 15% if payment is over a year late.
Need Support?
If you’d like help working out whether payments on account apply to you, or how to plan for upcoming deadlines, feel free to get in touch. We’ll make sure everything is clear and handled on time.
If you require any further clarification on this, please don’t hesitate to drop me an e-mail or leave a comment below.
