urlscan.io logo urlscan.io
SecurityTrails logo

www.handpickedaccountants.co.uk Open in urlscan Pro
2606:4700:20::681a:b79  Public Scan

Back to summary
URL: https://www.handpickedaccountants.co.uk/articles/tax-returns/understanding-hmrc-what-is-payment-on-account
Submission: On September 22 via manual from GB — Scanned from GB

Form analysis 5 forms found in the DOM

GET https://www.handpickedaccountants.co.uk/site-search

<form id="header-search" action="https://www.handpickedaccountants.co.uk/site-search" method="get" class="none inline-block-large-up vertical-middle relative">
  <label for="site-search" class="visually-hidden">Search Site</label>
  <input type="search" id="site-search" name="site-search" placeholder="Search..." class="font-open-sans font-size-14 round padding-y0 margin-0 border-0">
  <button class="transparent absolute top-0 left-0 padding-8 margin-l3 margin-t1 margin-b0 hover-fade fade-8">
    <i class="fi fi-search font-size-13 block line-height-1 colour-grey-dark"></i>
    <span class="visually-hidden">Submit</span>
  </button>
</form>

GET https://www.handpickedaccountants.co.uk/search

<form action="https://www.handpickedaccountants.co.uk/search" method="get" class="table width-100 height-100 text-left margin-0-auto" style="max-width: 1000px;">
  <input type="hidden" name="fullscreen" value="true">
  <div class="table-cell vertical-middle padding-r50">
    <a href="https://www.handpickedaccountants.co.uk/" title="Home | Handpicked Accountants" class="block">
<i class="sprite-logo-search block"></i>
<span class="visually-hidden">Handpicked Accountants</span>
</a>
  </div>
  <div class="table-cell vertical-middle width-70 padding-r-gutter">
    <div class="relative">
      <label for="header-search-postcode" class="colour-white visually-hidden">Postcode / Location</label>
      <input type="search" required="" id="header-search-postcode" name="search_postcode" placeholder="Postcode / Location..." value="" class="padding-l40 margin-0 radius">
      <i class="input-icon fi fi-pinpoint font-size-16 block line-height-1 absolute top-0 left-0colour-black font-size-22"></i>
    </div>
  </div>
  <div class="table-cell vertical-middle width-30 padding-r-gutter">
    <div class="relative">
      <label for="search-radius" class="colour-white visually-hidden">Radius</label>
      <select name="search_radius" id="search-radius" class="background-image-none margin-0 radius">
        <option value="" selected="" disabled="">Radius…</option>
        <option value="5">5 miles</option>
        <option value="10">10 miles</option>
        <option value="20">20 miles</option>
        <option value="30">30 miles</option>
        <option value="40">40 miles</option>
        <option value="50">50 miles</option>
      </select>
      <i class="fi fi-arrow-down block line-height-1 absolute top-50 right-0 z-index-3 pointer-events-none margin-r20 font-size-12 colour-grey margin-t0pt5em-negative"></i>
    </div>
  </div>
  <div class="table-cell vertical-middle">
    <button type="submit" class="colour-green padding-x30 padding-y10 radius margin-0 font-size-18">
      <span class="table">
        <span class="table-cell padding-r10">
          <i class="fi fi-search block line-height-1"></i>
        </span>
        <span class="table-cell">
          <span class="block margin-t3 uppercase">Search</span>
        </span>
      </span>
    </button>
  </div>
</form>

GET https://www.handpickedaccountants.co.uk/search

<form action="https://www.handpickedaccountants.co.uk/search" method="get" class="search-location search-header-cell">
  <div class="label-placeholder height-1em font-size-inherit margin-b-gutter">
    <div class="margin-b0 height-1em font-size-inherit">
      <input required="" value="" type="search" id="search-postcode" name="search_postcode" class="margin-b0 border-0 radius width-100 height-100 padding-l-gutter padding-r50 transparent">
      <label for="search-postcode" class="radius nowrap">Enter your postcode or location</label>
      <a href="#" data-get-location-icon="" onclick="getLocation(); return false;" title="Get Location" class="absolute block top-0 right-0 z-index-2 padding-15 hover-fade fade-7 margin-t7 margin-r2">
<i class="fi fi-pinpoint font-size-16 colour-grey-dark block line-height-1"></i>
</a>
    </div>
  </div>
  <div class="label-placeholder height-1em font-size-inherit margin-b-gutter">
    <div class="margin-b0 height-1em font-size-inherit">
      <select name="search_radius" id="search-radius" class="background-image-none margin-b0 border-0 radius width-100 height-100 vertical-top padding-x-gutter transparent">
        <option value="" selected="" disabled="">&nbsp;</option>
        <option value="5">5 miles</option>
        <option value="10">10 miles</option>
        <option value="20">20 miles</option>
        <option value="30">30 miles</option>
        <option value="40">40 miles</option>
        <option value="50">50 miles</option>
      </select>
      <label for="search-radius" class="radius nowrap">Radius</label>
      <i class="block width-1em line-height-1 fi fi-arrow-down absolute right-0 z-index-3 pointer-events-none margin-r20 top-0 font-size-12 colour-grey-dark top-50 margin-t0pt5em-negative"></i>
    </div>
  </div>
  <div class="height-1em font-size-inherit margin-b-gutter">
    <button class="padding-0 radius overflow-hidden margin-b0 width-100 height-100 block font-size-inherit">
      <span class="button transparent table table-em-height height-1em padding-0 font-size-inherit fixed-font-size margin-b0 width-100 height-1em">
        <span class="table-cell font-size-20 padding-x20 text-left uppercase"> Search </span>
        <span class="table-cell width-1em">
          <span class="block fi fi-search font-size-20"></span>
        </span>
      </span>
    </button>
  </div>
</form>

POST https://www.handpickedaccountants.co.uk/search

<form data-lat-lng-form="" action="https://www.handpickedaccountants.co.uk/search" method="post" class="none">
  <input data-lat="" name="latitude" type="hidden" value="">
  <input data-lng="" name="longitude" type="hidden" value="">
</form>

<form class="js-ajax-newsletter-subscribe">
  <div class="js-form-section block-small-only table-medium-up table-em-height form-height-60 font-size-60 fixed-font-size width-100">
    <span class="absolute invisible">
      <input type="hidden" name="url" value="https://www.handpickedaccountants.co.uk/articles/tax-returns/understanding-hmrc-what-is-payment-on-account">
      <input type="text" name="website" value="" class="honeypot">
    </span>
    <div class="js-form-wrap table-cell-large-up vertical-top width-30-large-up label-placeholder font-size-inherit padding-r5-large-up margin-b-gutter">
      <div class="margin-b0 height-1em font-size-inherit">
        <input required="" value="" type="text" id="newsletter-subscribe-name" name="newsletter-subscribe-name" class="margin-b0 border-1 radius width-100 height-100 padding-l-gutter transparent">
        <label for="newsletter-subscribe-name" class="radius nowrap">Your Name *</label>
      </div>
    </div>
    <div class="js-form-wrap table-cell-large-up vertical-top width-30-large-up label-placeholder font-size-inherit padding-r5-large-up margin-b-gutter">
      <div class="margin-b0 height-1em font-size-inherit">
        <input required="" value="" type="email" id="newsletter-subscribe-email" name="newsletter-subscribe-email" class="margin-b0 border-1 radius width-100 height-100 padding-l-gutter transparent">
        <label for="newsletter-subscribe-email" class="radius nowrap">Your Email Address *</label>
      </div>
    </div>
    <div class="js-form-wrap table-cell-large-up vertical-top width-30-large-up label-placeholder font-size-inherit padding-r5-large-up margin-b-gutter">
      <div class="margin-b0 height-1em font-size-inherit">
        <select required="" id="newsletter-subscribe-newsletter" name="newsletter-subscribe-newsletter" class="block background-image-none margin-b0 padding-r50 border-1 radius width-100 height-100 vertical-top padding-x-gutter transparent">
          <option value="" selected="" disabled="">&nbsp;</option>
          <option value="17">Accountant</option>
          <option value="18">Company Owner/Director</option>
          <option value="19">Solicitor/Law Firm/Business Advisor</option>
          <option value="20">Education Sector</option>
          <option value="21">Other</option>
          <option value="all">All of the above</option>
          <option value="none">None of the above</option>
        </select>
        <label for="newsletter-subscribe-newsletter" class="radius nowrap">What best describes you? *</label>
        <i class="block width-1em line-height-1 fi fi-arrow-down absolute right-0 z-index-3 pointer-events-none margin-r20 top-0 font-size-12 colour-grey-dark top-50 margin-t0pt5em-negative"></i>
      </div>
    </div>
    <div class="table-cell-large-up height-1em vertical-top width-10-large-up font-size-inherit padding-l5-large-up margin-b-gutter">
      <button class="padding-0 radius overflow-hidden margin-b0 width-100 height-100 block font-size-inherit height-1em">
        <span class="button transparent table table-em-height height-1em padding-0 font-size-inherit fixed-font-size margin-b0 width-100">
          <span class="table-cell font-size-14 uppercase padding-x20">
            <span class="block margin-b3-negative">Submit</span>
          </span>
        </span>
      </button>
    </div>
  </div>
</form>

Text Content

Skip to Content
Skip to Main Menu
 * Find an Accountant
 * 
 * Accountants Area

Find an Accountant
Search Site Submit
Search


HANDPICKED ACCOUNTANTS

 * How It Works
 * Services
    * Accounts and Bookkeeping
    * Auditing and Assurance
    * Business Advisory
    * Corporate Finance
    * Corporate Tax
    * Forensic Accounting and Litigation
    * Financial Planning
    * Insolvency
    * Payroll
    * Personal Tax
    * Self-Assessment
    * Tax Investigation
    * Tax Returns

 * Help Centre
    * News
    * FAQs
    * Articles
    * Case Studies

 * Locations
 * Contact

Free Listing
Find an Accountant
Menu
 * How It Works
 * Services
   * Accounts and Bookkeeping
   * Auditing and Assurance
   * Business Advisory
   * Corporate Finance
   * Corporate Tax
   * Forensic Accounting and Litigation
   * Financial Planning
   * Insolvency
   * Payroll
   * Personal Tax
   * Self-Assessment
   * Tax Investigation
   * Tax Returns
 * Help Centre
   * News
   * FAQs
   * Articles
   * Case Studies
 * Locations
 * Contact


 * Home
 * Help Centre
 * Tax Returns
 * Understanding HMRC: What is Payment On Account?


UNDERSTANDING HMRC: WHAT IS PAYMENT ON ACCOUNT?

Written by David Tattersall
20th January, 2021 - Tax Returns

SHARE:

Share on Facebook Share on Linkedin Share on Twitter


PAYMENT ON ACCOUNT – THE BASICS

Implemented as a way of helping the self-employed ease the burden of their
annual tax bill by staggering payment throughout the year, Payment on Account
can be cause for much confusion and frustration for those enrolled in the self
assessment scheme.

Essentially Payment on Account are advance contributions towards your self
assessment tax bill, with the idea being that you won’t be hit with a hefty
payment you can’t manage further down the line. Instead you pay your bill in two
instalments, one on 31st Jan (this is the same day as your ‘balancing payment’
which will be discussed later) and the other on 31st July. The amount due is
calculated by looking at your previous year’s tax bill, and are worked out as
half the previous year's tax and class 4 National Insurance liability. Any
student loan repayments or Capital Gains Tax Class 2 National Insurance will not
be included - you’ll pay those in your balancing payment instead.

Payment on Account is not optional; you will be automatically enrolled when you
submit your self assessment tax return. The only exceptions to this is if your
annual tax bill comes in at less than £1,000, or  if in excess of 80% of the
year’s tax was taken off at source, e.g. through Pay As You Earn (PAYE).


YOUR FIRST YEAR WITH PAYMENT ON ACCOUNT

If you are preparing for your first year of Payment on Account, you should be
aware of what to expect. If not, you may be in for a big shock the first time
Payment On Account applies to you as HMRC will expect you to pay 150% of your
tax bill at once. This is best illustrated with an example:

 * You owe £6,000 on earnings between 6th April 2015 and 5th April 2016.
 * This payment will need to have been made in full by midnight 31st January
   2017. On top of this you will also need to pay an additional £3,000 at the
   same time. This is an advance payment towards your tax return the following
   January.
 * This will then be followed by a further payment of £3,000 by midnight 31st
   July 2017. 
 * As a result, when it comes to filing your return for the following financial
   year, £6,000 will have already been paid towards it.
 * If for any reason you have overpaid (such as your earnings were lower than
   anticipated), then you’ll be given a rebate
 * If your earnings were higher than expected and you’ve consequently not paid
   enough, then you must pay anything you owe by 31st January 2018. This is
   known as a balancing payment. Your Payment on Account amount will be amended
   to reflect your increased tax liability. 
 * If your earnings remain the same, you’ll maintain the payments of £3,000
   every January and July. 

This is one of the reasons why it is always advisable to submit your tax return
as early as possible. With more time to get the money together, hopefully the
more likely it is that you will be able to meet the payment. This is
particularly pertinent in your first year when you may be faced with a higher
than usual bill due to Payment on Account.

Need help choosing an accountant? Our team can suggest the best accountants in
your local area.
0800 063 9258


FLUCTUATING INCOMES

Due to the nature of business, you may find that your income can fluctuate from
year to year. This is where problems can arise when it comes to Payment on
Account.

If your profits suffer a fall, and your Payment On Account is higher than your
tax bill will be, you can ask HMRC to reduce your payments to bring it in line
with what you will actually owe. This can be done by way of form SA303, which
lets you state that your tax liabilities are down. If you have already paid more
than what you owe, HMRC will simply refund you this amount.

You should only do this however if you are sure your profits are down, or there
is another legitimate reason why your tax bill is going to fall. You should not
apply to reduce your Payment on Account simply because you cannot afford to pay
what is due. If you reduce your Payment on Account by too much, HMRC will charge
you interest on the shortfall and apply further penalties for underpaying your
tax which will only make the situation worse.


THE BALANCING PAYMENT

If however your income fluctuates the other way, meaning your tax liability is
more than was previously estimated, you will be required to make a ‘balancing
payment’ to bring your account up to date. This will be due by midnight on 31st
January next year.

To illustrate this situation, let’s again imagine your annual tax bill for
2015/16 was anticipated to be £6,000 (based on your 2014/15 tax liability). Once
you have made both Payment on Account payments, you will have paid a total of
£6,000 by 31st July. However, when you actually submit your tax return, you
discover that the total tax you owe for the 2015/16 tax year is considerably
higher at £10,000.

You will then have an outstanding balance of £4,000 which you will need to pay
by 31st January 2017. This is known as a balancing payment.

Therefore your 2017 payments would work as follows:

A total tax payment of £9,000 on 31st January 2017 made up of:

 * £4,000 balancing payment for your 2015/16 tax bill
 * £5,000 for the first Payment on Account contribution for 2016/17 (worked out
   as 50% of your 2015/16 tax bill of £10,000)

There will then be another £5,000 instalment due on 31st July 2017 which will
satisfy your 2016/17 tax bill.

As with all tax matters if you are confused about any aspect of the self
assessment process you should enlist the help of an accountant. Handpicked
Accountants can recommend a qualified and trusted accountant who can advise on
all matters relating to self assessment. We only refer accountants with whom we
have a long-standing working relationship, so you can be sure they are reliable
and experienced.

SHARE:

Share on Facebook Share on Linkedin Share on Twitter
Previous Article
Next Article

SUB CATEGORIES

 * Accounting
 * Accounting Software
 * Business Start-Ups
 * Business Tax
 * Covid19 Coronavirus
 * Financial Advice
 * General
 * HMRC
 * Insolvency
 * Personal Tax
 * Tax Returns

RELATED ARTICLE

HOW LONG DOES IT TAKE TO GET A TAX REFUND FROM HMRC?

RELATED ARTICLE

WHAT HAPPENS IF I AM LATE FILING MY SELF-ASSESSMENT TAX RETURN?

Handpicked Accountants
Postcode / Location
Radius Radius… 5 miles 10 miles 20 miles 30 miles 40 miles 50 miles
Search


FIND YOUR HANDPICKED ACCOUNTANT

Enter your postcode or location
  5 miles 10 miles 20 miles 30 miles 40 miles 50 miles Radius
Search
-or-
  Greater London South East South West East of England East Midlands West
Midlands North East North West Yorkshire & Humberside Northern Ireland Wales
Scotland Select Region


Speak to a Handpicked Expert today

0330 191 4056

Hi there - I'm David from Handpicked Accountants. If you need help finding the
right accountant, simply give me a call. My expertise is in connecting business
owners with the very best professional services and I'm on hand to assist you
today.



Subscribe to the newsletter and receive news, advice and key insights in your
inbox every month

Your Name *
Your Email Address *
  Accountant Company Owner/Director Solicitor/Law Firm/Business Advisor
Education Sector Other All of the above None of the above What best describes
you? *
Submit
Thank you for subscribing to our newsletter. ×

By clicking submit you will receive the Handpicked Accountant newsletter. All
emails include an unsubscribe link. You may opt-out at any time. See Privacy
Policy.




HANDPICKED ACCOUNTANTS

OFFICE

Handpicked Accountants
340 Deansgate
Manchester
M3 4LY

SERVICES

 * Accounts and Bookkeeping
 * Payroll Services

INFORMATION

 * Privacy Policy
 * Accountants By Region
 * Find An Accountant
 * How It Works

MISC

 * Cookie Policy
 * Contact
 * Site Map

 * Handpicked Accountants on Facebook
 * Handpicked Accountants on LinkedIn
 * Handpicked Accountants on Twitter/X

© 2024 HPA - Handpicked Accountants is a trading name of Begbies Traynor
(Central) LLP a limited liability partnership registered in England and Wales
No. OC306540. Regulated for Consumer Credit Act business by the Financial
Conduct Authority. Copyright 2019 Handpicked Accountants, all rights reserved.

Find an Accountant
Call our experts today : 0330 191 4056
 * How It Works
 * Services
   * Accounts and Bookkeeping
   * Auditing and Assurance
   * Business Advisory
   * Corporate Finance
   * Corporate Tax
   * Forensic Accounting and Litigation
   * Financial Planning
   * Insolvency
   * Payroll
   * Personal Tax
   * Self-Assessment
   * Tax Investigation
   * Tax Returns
 * Help Centre
   * News
   * FAQs
   * Articles
   * Case Studies
 * Locations
 * Contact


HANDPICKED ACCOUNTANTS

 * How It Works
 * Services
    * Accounts and Bookkeeping
    * Auditing and Assurance
    * Business Advisory
    * Corporate Finance
    * Corporate Tax
    * Forensic Accounting and Litigation
    * Financial Planning
    * Insolvency
    * Payroll
    * Personal Tax
    * Self-Assessment
    * Tax Investigation
    * Tax Returns

 * Help Centre
    * News
    * FAQs
    * Articles
    * Case Studies

 * Locations
 * Contact

Free Listing
Find an Accountant
Menu

Edit this Page


YOUR BROWSER IS OUT-OF-DATE!

Update my browser now

Update your browser to view this website correctly. Upgrading your browser will
increase security and improve your experience on all websites.

This site uses cookies to monitor site performance and provide a more responsive
and personalised experience. You must agree to our use of certain cookies. For
more information on how we use and manage cookies please read our PRIVACY POLICY

Accept All & Close






DAVID TATTERSALL

HANDPICKED ACCOUNTANTS

Apologies, we are currently out of hours. Can we call you back? Enter your
number below and let us know when is best for you on the next screen.



Schedule Callback

We're by ResponseiQ

×

Click here to schedule your free callback?