Do you understand your Self Assessment Tax Bill ? Are you paying too much tax?
Understand your Self Assessment tax bill
Payments 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 Self Assessment 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.
Example Your bill for the 2019 to 2020 tax year is £3,000. You made 2 payments on account last year of £900 each (£1,800 in total). The total tax to pay by midnight on 31 January 2021 is £2,700. This includes:
your ‘balancing payment’ of £1,200 for the 2019 to 2020 tax year (£3,000 minus £1,800)
the first payment on account of £1,500 (half your 2019 to 2020 tax bill) towards your 2020 to 2021 tax bill
You then make a second payment on account of £1,500 on 31 July 2021. If your tax bill for the 2020 to 2021 tax year is more than £3,000 (the total of your 2 payments on account), you’ll need to make a ‘balancing payment’ by 31 January 2022.
Payments on account do not include anything you owe for capital gains or student loans (if you’re self-employed) - you’ll pay those in your ‘balancing payment’.
IF YOU HAVE A CHANGE DECREASE IN INCOME OR OTHER CHANGE AND DO NOT CLAIM TO REDUCE YOUR PAYMENTS YOU MAY BE PAYING TOO MUCH TAX IN YOUR JULY PAYMENT
IF YOU THINK YOU HAVE PAYED TOO MUCH SELF ASSESSMENT TAX OR NEED HELP WITH ANYTHING SELF ASSESSMENT RELATED
CONTACT WALSH WEST CCA 7 DAYS A WEEK:
+44 0203 488 7503 / 01992 236 110
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