- Payments on account to hmrc
Anyone got any tips for softening the blow? I was braced for paying 2016/17 tax year in jan 18 but not half of 17/18 as well.
Is it best to set up a separate tax account and pay in as you get paid, then when you get the bill its there in a separate account?
Also, i see if you underestimate you get charged interest on the balance, so i assume you overestimate.Posted 2 years agojimdubleyouSubscriber
1) Put at least 30% of your income into your “tax” account. Never, ever, touch it unless you’re paying tax.*
2) It’s only a PITA the first year – if you don’t have a wildly varying income, your payments on account cover subsequent years.
*your accountant might well be able to give you a running total of how much you should have put away.Posted 2 years agoroneSubscriber
Ok thats brilliant thanks, so its a year 1 only pain paying half the current year on account, years 2 and thereafter you just pay the annual due.
Thanks, much appreciated
You always have to pay on account, but you only pay the balance for the end of whole year if more than what is already on account.Posted 2 years agocoomberMember
Tax liability £1000
Following January pay £1000 + £500 = £1500
Following July pay £500
Then pay £500 every January and July ongoing until taxable profits/tax liability goes up or down.
First year is worst though as you pay 1.5 x tax in one go, but ongoing does even out.
Sorry if patronising, but your reply read like it’s a one year thing whereas you’ll have payments on account ongoing unless your tax liability goes down.
rone – Member
You always have to pay on account, but you only pay the balance for the end of whole year if more than what is already on account.
Spot on. As an example:
I.e tax liability £1,500, payments on account made 2 x £500, you’d have £500 to pay the following January, and payments on account that January and July of £750.
You can set up a payment scheme with HMRC to pay ad hoc if that helps remove the temptation to take from a seperate account.Posted 2 years ago
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