31 July 2023 is the date by which your second payment on account towards your tax liability for the year ended 5 April 2023 is due to HMRC.
If you are thinking ‘What?!!’ the likelihood is that you are not required to make payments on account. Taxpayers have to make two payments on account towards the final tax liability every year unless:
- your last Self Assessment tax bill was less than £1,000
- you pay more than 80% of the total tax you owe at source, for example through PAYE on your salary
Payments on account (POAs) are based on the previous tax year’s liability to income tax and Class 4 National Insurance contributions (if applicable) but they do not include any part of your liability that arose due to capital gains tax.
POAs are HMRC’s best guess at what you will owe for the following tax year and are due by 31 January and 31 July. Therefore, for the tax year ended 5 April 2023, payments on account each equal to 50% of your 2021/22 liability would be due on 31 January 2023 and 31 July 2023.
As a consequence of the POAs being estimates you may have paid too much or too little when your final tax liability is calculated. If you have paid too little the balancing payment is due by the 31 January following the end of the tax year in question. If you have paid too much, HMRC will repay the difference once they have processed your tax return.
For the very efficient amongst you, if you submit your tax return before the 31 July payment deadline and your final liability is less than the total of the estimated POAs, then you can simply reduce the payment to reflect the amount actually due.
For the less efficient, payments that are made after the payment deadline will attract late payment interest which based on the current rate in force is 7.5% per annum. It is possible to reduce payments on account if you think your income will be lower than in the previous year, but this should be done with caution as interest will be charged on unpaid sums even if subject to a reduction, and could be backdated to January 2023.
HMRC Self-Assessment Helpline
If you need assistance regarding any self-assessment (SA) matters, HMRC’s SA helpline is usually the place to go. However, for three months to 4 September 2023, HMRC’s SA helpline is closed as a means of directing SA queries to the department’s digital services including the online guidance, digital assistant and webchat.
Whilst the SA helpline is closed, taxpayers that need additional support can reach HMRC’s extra support team via webchat or by phoning another HMRC helpline such as ‘Income Tax General Enquiries’ on 0300 200 3300. However, agents (e.g. if Claritas look after your personal tax affairs) will still be able to speak to HMRC on your behalf.
