@heathhillgreen: HMRC's Payment on Account system helps manage tax payments for self-employed individuals in the UK. This applies if your last Self Assessment tax bill was over £1,000 and less than 80% was collected at source. You're required to make two payments during the year, each half of your last tax bill. Suppose your total tax bill for the last tax year was £5,000. Under this system, you need to make two payments of £2,500 each. The first payment is due on 31 January, at the same time as any balance owed for the previous year. If you owed exactly £5,000 and made no prepayments, you’d pay £7,500 on this date (£5,000 for last year plus £2,500 for the current year). The second payment of £2,500 is due on 31 July. Once you submit your tax return for the current year, if your total tax due is more than these payments (e.g., £6,000), you must pay the additional £1,000 by the next 31 January, along with your first payment on account for the following year. If it was less (e.g., £4,000), you would have overpaid by £1,000, which could be refunded or offset against the next bill. You can adjust your Payments on Account if you expect to earn less. For instance, if you lower each payment to £2,000, totaling £4,000, but end up owing £5,000, you will have underpaid by £1,000. HMRC will require you to pay this balance by the next 31 January and will charge interest on the underpaid amount from when it was due until it is paid. Accurately estimating your income to avoid underpayment and potential interest charges is crucial. Overestimating your payments can be safer, as overpayments are either refunded or offset against future bills and can earn interest. #money #businessowner #businesstips #moneytips #taxes

Bilal

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Saturday 04 May 2024 06:46:12 GMT