[ad_1]
Taxpayers who haven’t settled their bill with HMRC must pay by 31st July or face fines and interest, say leading audit, tax and business advisory firm, Blick Rothenberg.
Tom Goddard, a Senior Associate at the firm, said: “From May 2022 HMRC has increased late payment interest from 3.5% to 8.25% as part of their agenda to crack down on people that owe tax. People who owe money for the 2024/25 tax year must pay their bill as soon as possible.
“Payments on account’ are payments towards your next tax bill and are paid in two instalments. If someone was required to pay £10k for their second payment on account, but didn’t pay until the 31st of December 2025, they would have to pay just under £350 in late payment interest.
“The payments are calculated based on the previous tax year’s income tax liability. If you believe your income levels are lower for 2024/25 than 2023/24, you are able to reduce your payments on account to reflect this. However, if you over reduce and subsequently underpay, HMRC will charge interest and could inflict penalties.”
He added: “Now that the 2024/25 tax year has ended, those who have already made a claim to reduce their payments on account should check whether this was appropriate based on their final income levels and if necessary, adjust their payments, as interest may have been accruing since 31st January 2025.
“This is also an incentive to get your tax return submitted early, as you can then ensure your July payment is accurate rather than overpay and wait until your tax return has been processed to claim a refund.
“Payments on account aren’t required for those who had an income tax liability of under £1,000 for the 2023/24 tax year, or those who have more than 80% of their tax liability paid at source, usually by PAYE. Capital gains tax (CGT) can also be ignored when considering payments on account.
“The taxpayers who are likely required to make payments on account are those with high levels of investment income, rental profits or who are self-employed. People who are experiencing financial problems and struggling with their tax bill should contact HMRC, as they may offer a ‘payment plan’ which can help to alleviate some of the financial burden, allowing payments to take place over a more manageable time frame.”
[ad_2]
Source link
