Most people know that the deadline for filing personal tax returns is January, and the new financial year begins in April, but our Manchester accountants are currently ready for another key deadline in July.
For people who have been asked to pay HMRC ‘on account’, your tax bill is split into two, with half due on July 31st and the remaining balance due on January 31st along with the filing deadline.
This raises the question of how much you have to pay in July though, and the answer is that it depends on whether or not you file this year’s tax return before July 31st.
If you complete your accounts and file your return, your July payment is calculated accordingly, and you can ask HMRC to accept a lower payment if your earnings for the year were less.
However, if you have not filed your tax return before the end of July, your payment is calculated as half of your previous year’s tax bill – so you would be asked to pay six months’ worth of tax based on your 2014-15 earnings
This can be problematic, especially if you had a slow year in 2015 in terms of earnings, as it could mean your estimated July payment is much higher than your actual tax liability should be.
Crawford’s Manchester accountants are available to discuss any concerns you might have about your upcoming July payment, and to help you decide when to file this year’s tax return so you know exactly how much you need to pay.
Tax is of course a portion of money you have already earned, so in general you should always have enough set aside to cover the bill when it comes in.
But unusual rules like the way payments ‘on account’ are calculated can catch some people off-guard – so contact us today if you need reassurance and expert assistance.