If you have a tax liability, you must make a payment to HMRC to avoid any penalties and interest.
The balancing payment and first instalment must reach HMRC on or before 31 January each year following the end of the previous tax year.
Where your last Self-Assessment tax bill was more than £1,000, second instalment is also due by 31 July following the end of the previous tax year
Payment on Account
Your bill for the 2016 to 2017 tax year is £3,000. You made 2 payments on account last year of £900 each (£1,800 in total).
The total tax to pay by midnight on 31 January 2018 is £2,700. This includes:
your ‘balancing payment’ of £1,200 for the 2016 to 2017 tax year (£3,000 minus £1,800)
the first payment on account of £1,500 (half your 2016 to 2017 tax bill) towards your 2017 to 2018 tax bill
You have to pay your second payment on account of £1,500 by midnight on 31 July 2018.
If your tax bill for the 2017 to 2018 tax year is more than £3,000 (the total of your 2 payments on account), you’ll need to make a ‘balancing payment’ by 31 January 2019.
If your tax estimate for the new tax year is lower than the previous year then you can reduce your payments on account when you complete your tax return.
If you are to reduce your payments on account and it turns out that you did indeed have the tax to pay then HMRC would re-instate them when you filed your tax return and charge interest on the basis of late payments of tax.
How to Pay
You can make a transfer from your bank account by Faster Payments, CHAPS or Bacs.
Your bill will tell you which account to pay in to. If you do not have a bill, or you’re not sure, use HMRC Cumbernauld.
You will need to use your 11-character payment reference when you pay. This is your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’. This can be found in the attached PDF showing your SATR Computation.
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