Self-employed tax deadline approaching on July 31st

Thursday 20 July 2017

Self-employed professionals have until July 31st to meet the deadline for tax payments. 

While it is not as well-known as the January self-assessment date, it remains extremely important and relates to an interim payment towards a tax bill for the rest of the year. 

HMRC refers to this as a payment on account, which goes towards their tax bill for the last year (ending in April 2017). It applies to self-employed professionals whose last self-assessment bill was £1,000 or more.

Those who have paid over 80 per cent of all the tax they owe will not need to make a payment until January 2018. The figure is calculated under the assumption that earnings in this tax year will be the same as the preceding 12 months.

As the payment on account is intended to cover half of the tax liability for the existing year, HMRC sets the figure at half of the last tax bill. This can cause issues for those who have experienced significant increases in wages in the last year that may not be replicated in the coming months.

If you wish to adjust the amount you are set to pay, log into the HMRC website and input your estimated earnings for  this tax year. However, make sure you do not understate this figure, as doing so could lead to a fine from the HMRC for late payment. 

Those who are unable to make the full payment should call HMRC as soon as possible in order to introduce a plan to pay in instalments. If you miss the deadline, interest will start to be accrued at 2.75 per cent annually. 

If the full total has not been cleared by next January, you could face a penalty charge of five per cent if it is not paid off 30 days after 31st January, with this rising by five per cent every six months. 

In order to ensure your finances are managed accordingly, freelancer and contractor accountants can be particularly useful. These specialists can advise you on all aspects of financial management and ensure taxes are paid accurately and on time. 

Budgeting is one specific area where the consultants can be useful, as they can recommend how much money to allocate each month for tax payments.

What’s more, these experts can advise you on the expenses you can claim, which can ensure a substantial reduction to your overall running costs. 

By Victoria McDonnell

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