If you are required to submit a self-assessment tax return, your bill for the year you are submitting becomes due on 31 January in the year following the end of the tax year.
Tax years run from 6 April one year to 5 April the following year. For the tax year ended 5 April 2019, the bill (as well as the deadline for the submission of your tax return) will be 31 January 2020.
On this date, you will be required to pay any income tax, national insurance or capital gains tax for your submitted return.
If you have any income tax that isn’t collected through the PAYE system then you may be required to make payments on account. The PAYE system is that which employers use to deduct income tax before passing it on to their employees. If you are only an employee then you will not be required to make payments on account.
However if you are self-employed, you have income from property rentals or anything else that isn’t taxed at source and the tax due is less than £1,000 or more than 80% of your tax liability is taken as source (e.g. through PAYE) then you will not be asked to make payments on account.
If you do need to make payments on account, you will have to make one on the 31 January submission deadline and then a further one on the 31st of July. Each payment will be half of the amount that which was due for the previous year.
As an example, let’s say your tax bill for the year ended 5 April 2019 is £10,000. This £10,000 will be due on 31 January 2020. On top of that, you will be asked to pay £5,000 by 31 January 2020 and a further £5,000 by 31 July 2020.
When you come to do your tax bill for the year ended 5 April 2020, you will have already paid £10,000 towards your bill, which will be deducted from the amount due. You will then need to make a balancing payment, along with any payments on account required for the following year.
If you think your circumstances will have changed (for example you are no longer self-employed) you can request a reduction in your payments on account from HMRC accordingly.
If at any time you miss a payment deadline, HMRC will add on penalties depending on how late your payment is. These penalties being when the payment is more than 30 days late when a penalty of 5% of the unpaid tax will be charged. If it is 6 months late, a further 5% is added and if it is 12 months later, another 5% is added to make a total of 15% of the unpaid tax.
If you require any further clarification on this, please don’t hesitate to drop me an e-mail or leave a comment below.