What is This Deadline?
If you're self-employed and pay your tax through payment on account, 31 July marks the deadline for your second payment. The amount you have to pay is based on your earnings for 2017-18. You must submit your tax return as you did in January.
'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
HMRC's Example: Your bill for the 2017 to 2018 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 2019 is £2,700. This includes:
- your ‘balancing payment’ of £1,200 for the 2017 to 2018 tax year (£3,000 minus £1,800)
- the first payment on account of £1,500 (half your 2017 to 2018 tax bill) towards your 2018 to 2019 tax bill.
You have to pay your second payment on account of £1,500 by midnight on 31 July 2019.If your tax bill for the 2018 to 2019 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 2020.
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’.
So that's all clear then? If not, contact us - we have many years experience in processing and submitting tax returns.