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Countdown to July tax deadline
AFS Team·2 August 2013·3 min read
The second payment on account date is July 31, 2013.
Late payments attract 3% interest on any tax owed.
The way self-assessment tax works is taxpayers pay any tax owed for the previous tax year and an advance payment on the following year’s tax on January 31.
Then a second payment on account equal to the first advance payment is due on July 31.
The date is also a red flag day for anyone that owes tax from the previous tax year, as a further 5% penalty is applied.
The tax bill for the last year would already have had a 5% penalty applied at the end of February.
Paying tax bills
HMRC offers several electronic ways to pay tax bills plus a budget plan that lets taxpayers set aside regular monthly payments towards future tax bills.
Most advisers would suggest the budget plan is not a good idea as taxpayers lose control of their cash and any commercial interest they could earn on the money.
A better idea is to make the same payments into a personal savings account.
Telling HMRC the payment will be late
If a taxpayer knows in advance a payment will be late, then they should contact their local tax office to explain the circumstances.
HMRC will pressure the taxpayer to borrow the money from a bank, family or friends – so have an answer ready when the customer service adviser asks the questions.
The four questions to answer will be:
• Why can’t you pay in full and on time?
• How have you tried to raise the money to pay the bill?
• How much can you pay now?
• How long will it take to pay the rest of the bill?
Next, they should offer to agree a payment plan. Taxpayers should think about this before making the call so they can make an offer they can afford rather than a rash high amount.
