By Mel Hackney
When you calculate the tax you owe through self-assessment, HMRC ask you to make ‘Payments on Account’ (‘POAs’) towards your liability for the following tax year. By default, these are set at the same level as the previous tax year’s liability.
The first of these payments is due on 31 January in the tax year to which it relates, and the second is due on 31 July following the end of the tax year. For example, POAs for the 2018/19 tax year (6 April 2018 to 5 April 2019) are due on 31 January 2019 and 31 July 2019 and calculated based on the level of your tax liability for the previous tax year, 2017/18.
However, if this year your income has gone down, or even stayed the same, it is likely that your tax liability will have reduced too.
By completing your tax return before 31 July 2019, you can establish what you owe on 31 July 2019 and you might end up paying less than you thought you would.
If the liability turns out to be higher than you thought, this will not impact what you owe on 31 July 2019, the balance will instead be paid on 31 January following the tax year.
This isn’t as complicated as it sounds. If your income has reduced compared to last year, get in touch and let us demystify how we can help you to pay less tax on 31 July!
