Income Tax Payments on Account

You may have noticed that your tax return includes payments on account. Payments on account are payments in advance towards your tax liability for the following tax year. You are required to make two payments on account every year unless:

  • Your last Self-Assessment tax liability was less than £1,000
  • You have already paid more than 80% of the total tax which you owe, which can be via your PAYE tax code
  • Each payment on account is half of your previous year’s liability and the payments are due by 31 January and 31 July each year. For example, if your 2020/21 tax liability is £4,000, you would need to make payments on account of £2,000 in January 2022 and July 2022 towards your 2021/22 tax liability.

    If your actual liability exceeds your payments on account, you must pay a balancing payment by the following 31 January.

    Payments on account do not include Capital Gains or Student Loan repayments however, if you are self-employed, you will pay these as part of your balancing payment.

    If you anticipate your tax liability is going to be lower than the previous tax year, you can apply to HM Revenue and Customs to reduce your payments on account. You can do this on online or by post.

    If your payments on account exceed your eventual tax liability for the year, H M Revenue and Customs will issue a refund to you. If you have reduced your payments on account and your actual liability exceeds the payments on account, you will be charged interest. Late payment penalties will be charged from 1 April 2022 at 5% unless you have a Time to Pay arrangement.

    If you would like to consider reducing your payments on account, please speak to your manager.

    Protecting Yourself Against Cybercrime

    What is cybercrime?

    Cyber criminals exploiting human or security weaknesses to steal data, passwords and money.

    The threat to businesses and individuals of cybercrime is increasing and there is an expectation that cyber criminals will attack at certain peaks of the year. For example, cyber criminals are known to target individuals and businesses paying their tax bills at this time of year. Cyber security and taking steps to reduce the threat is more important than ever.

    Cyber attacks can be prevented by taking some basic security steps:

  • Use strong passwords which contain letters, numbers and symbols and do not reuse the passwords for multiple logins.
  • Install security software such as anti-virus packages and two factor authentication and keep them updated.
  • If you receive an email, text message or phone call that you were not expecting do not open it or any links within the email or text message and do not provide any personal information, including any passwords or bank account details.
  • Danielle Gay

    Accounts Trainee

    Written by Danielle Gay

    Sign Up to Our Newsletter