Self Assessment Tax Payment Date Fast Approaching

For individuals caught by the Self-Assessment tax regime, there are a few key payment dates to remember each year, to avoid HMRC charging interest and penalties on the income tax paid after these dates.

It may seem like only five minutes since the last payment was due at the end of January, but 31 July 2014 marks the due date for the second payment on account against your total 2013-14 income tax liability.

We are currently in the process of writing to clients, reminding them to make payment by 31 July. We are also reminding clients of the benefits of filing the 2014 Tax Return early.

Payments on account are based on the previous year’s tax liability but these can be reduced in cases where your current year tax liability has reduced. In most cases, this is only revealed when the tax return is completed and by that time, the July instalment may already have been paid.  In cases where the Tax Return is completed before the end of July, the second payment can be reduced if the total liability is lower than the previous year.  However, where the liability is higher than the previous year, the second payment on account is not increased and individuals benefit from the additional time to budget for the following January when the balancing payment falls due.

It is worth mentioning that HMRC can charge a penalty where a claim to reduce payments on account is incorrectly made, and your income has not actually decreased. Time is running out for those considering reducing the July payment, and we would urge anyone in this position to take action before it is too late.