The self assessment tax payments dates are simply the 31st January and 31st July, but how much you have to pay can be complicated. Below, we explain how much you have to pay on the self assessment tax payment dates.
How the self assessment tax payment dates work
There are two self assessment tax payment dates you need to pay your tax by. The method of payment usually involves one balancing payment and two payments on account of your tax liability as follows…
one balancing payment on 31 January after the tax year
one 50% payment on account on 31 January during the tax year and
another 50% payment on account on 31 July after the tax year.
The payments on account are based on the net income tax and national insurance liability of the previous tax year. That’s your net tax payable after deductions for PAYE paid, but before any payments on account are deducted.
You can ignore capital gains tax of the previous year when calculating the payments on account. You pay all CGT as part of the final payment due on 31 January following the end of the tax year.
A final payment (or repayment) is due on 31 January following the tax year.
There is a 5% surcharge on any taxes that remain unpaid after 28 February, and a further 5% on taxes not paid after 31 July. For the most up to date details on self assessment tax payment penalties see here.
An example of self assessment tax payments…
If your net tax liabilities are the following:
2020/21 is £0
2021/22 is £2,000
2022/23 is £5,000
2023/24 is £800
… you will need to make the following payments by:
31/01/22: £0 (remaining balance of 2020/21 £0, no payment on account required)
31/07/22: £0 (no payment on account required)
31/01/23: £3,000 (remaining balance on 2021/22 £2,000, plus half of 2021/22 as a payment on account towards 2022/23)
31/07/23: £1,000 (half of 2021/22 as a payment on account towards 2022/23)
31/01/24: £5,500 (remaining balance of 2022/23 £3,000, plus half of 2022/23 as a payment on account towards 2023/24)
31/07/24: £2,500 (half of 2022/23 as a payment on account towards 2023/24)
31/01/25: refund of £4,200 (excess payments on account)
31/07/25: £0 (payment on account not required)
Can you avoid tax payments on account?
You don’t have to make payments on account if…
income tax and NIC liability for the previous year (net of tax deducted at source) is below £1,000 or
if your tax deducted at source (e.g. PAYE on your payslips) was more than 80% of the income tax and NIC liability for the previous year.
Reduce your tax payments on account
You can also apply to have the payments on account reduced if you expect your liability for a tax year to be less than the previous year.
Contact us if you’d like any help with reducing your self assessment tax payments or with your tax returns.
If you have a child aged 16, check whether you are still receiving all the child benefit and child tax credits you expect to.
Child benefit and child tax credit both stop automatically on 31st August on or after the child’s 16th birthday, but where the child is in approved education or training, the parent who claims the child benefit is entitled to extend that claim until the child reaches their 20th birthday. ‘Approved education’ means at least 12 hours of supervised study per week, and the training can include an apprenticeship.
From September 2013 children who live in England (the rules are different in Wales, Northern Ireland and Scotland) are required by law to remain in education or training until the end of the academic year in which they turn 17. So there are a lot of families out there with 16 years olds who are in approved education, but who have lost their child benefit.
If you are one of those parents, and you want to continue to receive the child benefit, you need to contact the Child Benefit office at HMRC, to inform them that your child is still in approved education or training.
Similar rules apply for child tax credit. In that case the claimant must contact the Tax Credit office.
Although child benefit and child tax credit are both administered by HMRC, you need to inform them twice, as one section of HMRC cannot pass the relevant information to another part!
High income child benefit charge
You may prefer not to receive the child benefit if you or your partner/spouse earns £50,000 or more. In that case all or part of the child benefit paid to your family is clawed-back through the operation of the high income child benefit charge (HICBC). HMRC has written to some of the parents who may be due to pay the HICBC, but not all, as they cannot correctly identify every person who may be liable to pay the charge. More details here: high income child benefit tax charge.
If you are the highest earner in a family that has claimed child benefit since 7 January 2013, and your total income is £50,000 or more, you need to declare that child benefit on your tax return form. If you don’t normally complete a self-assessment tax return form, you need to ask HMRC to set you up on the self-assessment tax return system. We can help you with that, but don’t delay, as if you fail to complete the tax return form on time there will be automatic penalties to pay.
Doing your own online tax return is obviously the cheap option compared to finding your own accountant to do it for you. However, is it cheaper in the long run?
Have you claimed everything? If your tax affairs are very straight forward, it could make sense to do your own online tax return. But if you have anything more complicated like self employment or property income, how do you know you are claiming everything you can? For example, if you do any work at home such as the paperwork, you could be entitled to claim a proportion of certain household bills. Higher rate tax payers would only need to claim additional costs of about £300 to cover the cost of a competitively priced accountant. A qualified accountant has a duty to take steps to ensure you pay the correct amount of tax, including claiming any expenses and allowances that are legitimately deductible.
Have you claimed too much, or not declared enough? If you get your own online tax return wrong, even if the mistake is an honest one, there could be financial consequences. The penalties charged depend on the severity, starting from up to 30% of the additional tax due for a lack of reasonable care, going up to 70% for deliberate errors. So a lack of care resulting in an underpayment of tax of £400 could cost you more than an accountant.
Will your Online Tax Return be on time? We all know what a chore it can be to dig out all of your paperwork and complete your tax return. That’s why so many leave it until the last minute, or even file it late (apparently 850,000 of us last year!). Filing late by just 1 day will cost you £100, which increases by a daily £10 if filed more than 3 months late.
Find an accountant? As well as helping to prevent all of the above, an accountant can identify other ways of saving tax that many people doing their own online tax return wouldn’t have heard of, such as obtaining tax relief by investing spare cash in a Seed Enterprise Investment Scheme.
The Taxman has launched a campaign to persuade tardy taxpayers to submit their late tax returns for 2011/12 or earlier years. If you have a personal tax return form (or notice to complete a tax return) sitting in a drawer, and have been putting off the tedious task of completing it, now is the time to act.
The Taxman’s campaign is called: My tax return catch-up. It was launched in July and will run to 15 October 2013. It is not open to those who operate outside the tax system in the so-called ‘black economy’, and have never received a tax return form or notice to submit a tax return.
All the late tax returns must be submitted by 15 October 2013, which is also the due date for paying any tax due. If you can’t pay all your outstanding tax by that date, you can ask for a time to pay agreement to spread the late tax payment over several months.
The incentives for joining the tax return catch-up campaign include lower penalties for late tax return submission and late payment of tax. Just how much lower those penalties will be is not specified, the actual discount will depend on your circumstances.
If you, or a friend or relative, want to take part in the late tax return campaign, that taxpayer first has to tell HMRC they want to join. This can be done online, by phone or post and we can do this on your behalf. We can also help with completing the late tax returns, calculating the tax due, and negotiating for time to pay outstanding tax with the tax office. Remember submitting a late tax return can sometimes result in a tax repayment!
Newsletter issue – August 2013. Save Tax! Sign up to receive tax tips and news.