Did you know that if your personal tax liability exceeds £1,000 HMRC will ask for payments on account towards the following years tax liability?
The payments on account are due on 31 January and again on 31 July.
These payments are then deducted from what you owe in the following year. Any additional tax or overpayment is then calculated when you submit the next tax return.
An example to show this is below:
2018 tax liability £1,000 due 31 January 2019
1st payment on account for 2018/19 £500 due 31 January 2019.
Total due 31 January 2019 £1,500
2nd payment on account for 2018/19 £500, due 31 July 2019.
2019 tax liability £1,200
Less payments made on account £1,000
Balance due for 2018/19 £200, on 31 January 2020
1st payment on account for 2019/20 £600
Total due 31 January 2020 £800
2nd payment on account for 2019/20 due 31 July 2020 £600
If you have an accountant, they will calculate this for you.
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I am partner at Knight Accountants, a family run accountancy practice based in St Leonards. We provide a fully serviced one stop shop for all your accounting needs. We also work on a fixed fees basis,...