Paying your self-assessment tax return
This week’s post is all about paying your self-assessment tax return, and what you can do if you cannot pay it as soon as you file your return (before 31st January).
This week’s post is all about paying your self-assessment tax return, and what you can do if you cannot pay it as soon as you file your return (before 31st January)
You’ll get a bill when you’ve filed your tax return. If you filed online you can view this:
- when you’ve finished filling in your return (but before you submit it) – in the section ‘View your calculation’
- in your final tax calculation – it can take up to 72 hours after you’ve submitted your return for this to be available in your account.
HMRC will send your bill by post if you did a paper return.
The deadlines for paying your tax bill are usually:
- 31 January – for any tax you owe for the previous tax year (known as a balancing payment) and your first payment on account
- 31 July for your second payment on account
Ways to pay
Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You’ll be charged interest and may have to pay a penalty if your payment is late.
The time you need to allow depends on how you pay.
Understanding your bill
Your bill includes the tax you owe for the last tax year. This is called a ‘balancing payment’ on your bill.
If this is more than £1,000, your bill will usually include an additional payment towards next year’s bill (known as a ‘payment on account).
If you made payments on account last year you’ll need to deduct any payments on account you made last year towards this year’s bill to work out what you owe.
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.
Reduce your payments on account
If you know your tax bill is going to be lower than last year, you can ask HM Revenue and Customs (HMRC) to reduce your payments on account. You can do this either online or by post.
If you cannot pay your tax bill:
If you are able to pay your tax bill in full, you should do so as soon as possible. This will stop more penalty charges and interest being added to your tax bill.
Contact HMRC to discuss support available.
HMRC may suggest you pay what you owe in installments. This is called a Time to Pay arrangement.
How you contact HM Revenue and Customs (HMRC) to make a Time to Pay arrangement depends on what your tax bill is for.
You can set up a self assessment payment plan (Time to Pay) using your Government Gateway account, if you:
- have filed your latest tax return
- owe less than £30,000
- are within 60 days of the payment deadline
- plan to pay your debt off within the next 12 months or less
If you cannot make your own Time to Pay arrangement online, call the Self Assessment helpline, for example you owe more than £30,000 or need longer to pay.
What you’ll need to make a Time to Pay arrangement
When you set up a Time to Pay arrangement you’ll need:
- the relevant reference number for the tax you cannot pay, such as your unique tax reference number
- your VAT registration number if you’re a business
- your bank account details
- details of any previous payments you’ve missed
HMRC will ask you:
- how much you can repay each month
- if you can pay in full
- if there are other taxes you need to pay
- how much money you earn
- what you usually spend (including bills and entertainment) each month
- what savings or investments you have
If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.
If you’ve received independent debt advice, for example from Citizens Advice, you may have a ‘Standard Financial Statement’. HMRC will accept this as evidence of what you earn and spend each month.
Let us know if you have any questions regarding your self-assessment tax return.
Does any of this resonate with you or your business? Book in a call with Lucy below, at a time that suits you.