If you have any personal tax liabilities due, these will be payable on 31 January.
This will not only be a payment of any balance of tax due for the 2023/24 tax year, but also a “payment on account” for the 2024/25 tax year.
A simple example:
Fred has a tax liability of £25,000 for the 2023/24 tax year. He paid £10,000 “on account” in January 2024 and £10,000 “on account” in July 2024. He therefore has to pay the balance of £5,000 on 31 January AND he has to make a “payment on account” for 2024/25 which is 50% of the total tax bill for the prior year – £25,000/2 = £12,500 – so his total liability due for payment on 31 January 2025 is £12,500 + £5,000 = £17,500.
Fortunately, Fred had his accounts and tax returns prepared in a timely fashion shortly after his year end, so he knew his liabili
ties many months ago and was able to plan for this- no last-minute shocks!
As with all things tax, it is not always that simple though. It may be possible to reduce the payment on account, but the position does need to be assessed and it “wrong” to simply reduce it because of cash flow issues. Interest will be charged on late payment if it is found that enough has not been paid. This does mean looking at current year trading and personal circumstances. Where a significant dividend was paid in 2023/24, but this is a one-off and nothing will be paid in 2024/25, there is a good case for reducing the payment on account.
How can we help you?
If you want to discuss the possibility of reducing your payment on account, then please contact us.
Similarly, contact us if you have a tax bill but lack the necessary funds – it may be possible to come to a “time to pay” arrangement with HMRC.