If you file self-assessment tax returns there's a chance that you are subject to making payments on account twice a year, 31 January during the estimated tax year and 31 July after the tax year end. They are advance payments of an estimated tax liability based on the previous year's submitted tax return. Most people don't have the luxury of knowing what their tax liability will be, particularly if they're self-employed and don't own a crystal ball, and the payments may well be excessive.
The first payment, in January, is going to be pretty much due unless you make a claim to reduce the payments on account on you tax return. But the second may well be able to be reduced if your tax liability is lower for that particular year. This could mean a significant boost to cash flow if the payment is lower than estimated and the extra cash may be most welcome - additional holiday spending money..?
So how do you check this? The simple answer is to submit your tax return before the 31 July payment is due. If the payment can be lowered, you pay less. If the tax for the year is increased over the previous year the payment stays the same as previously estimated as the balance is due the following January. There is no real downside to doing your return early and may well mean you have less to pay in the summer than you thought!
If you want to check your tax position or would like assistance with preparing your tax return, feel free to contact Marc Dorsett on 01245 228146 or email@example.com who will be pleased to discuss the positon with you.
This is not legal advice; it is intended to provide information of general interest about current legal issues.