Deadline for making the 'interim tax payment' falls on 31st July
With less than two weeks left until the deadline, self-assessment taxpayers in the UK are reminded to make their second payment on account for the 2024/25 tax year. The payment is due by midnight on 31st July, 2025, to avoid interest charges and penalties.
The second payment on account is an advance payment towards next year's tax bill, based on the previous year's tax liability. It is typically split into two equal instalments, with the first payment due by 31st January, 2025. This deadline remains consistent across multiple professional accounting sources, including e2eaccounting.co.uk and pi-accountancy.co.uk.
Missing the 31st July deadline can result in interest and potential penalties from HMRC. It is, therefore, crucial to make the payment on time.
Who Needs to Pay?
Many self-employed people are required to make two payments on account each year. This includes those with rental income, investment income, capital gains, income from abroad, high earners, and those who need to repay child benefit or claim extra pension relief.
Payment Options
Paying a self-assessment tax bill can be done in a single lump sum using a debit card, corporate debit or credit card (with a fee), online banking, local bank branch, or by posting a cheque.
Correcting Mistakes
If a mistake is made in a tax return, it can be corrected within 72 hours online or by downloading a new form to fill in. After 72 hours, an error must be reported to HMRC in writing.
Support for Those Struggling to Pay
For those struggling to pay their tax bill, it's important to contact HMRC as soon as possible to discuss options such as a 'Time to Pay' arrangement or a Budget Payment Plan.
Late Payment Penalties
The late payment interest rate has been increased to 8.25%, making it more important than ever to pay outstanding tax by the deadline. Penalties can be increased if the tax due is not paid, with a 5% penalty charged 30 days after the due date, another 5% after six months, and an additional 5% after twelve months.
Excuses for Late Returns
HMRC may accept certain excuses for late tax returns, including death of a close relative, hospitalization, or computer failure.
Registering for Self-Assessment
To file a self-assessment tax return, you need to register with HMRC by 5th October for the following tax year.
Claiming Expenses
Certain expenses can be claimed when filing a self-assessment tax return, such as office costs, travel costs, and a portion of household expenses if working from home.
Deadline for Filing and Paying Tax Bill
The deadline to file a self-assessment tax return and pay the tax bill is 31st January, if done online, for the previous tax year. Those who file their tax return by paper have to send it in by 31st October, but the deadline to pay any tax due remains 31st January.
Number of Tax Returns Filed
Approximately 12 million people are expected to file a self-assessment tax return each year.
Late Filing and Payment Penalties
Late filing of a tax return and payment will result in a £100 penalty, with additional penalties if payment is more than three months late.
Increased Late Payment Interest Rates
From April 2025, the government has increased the late payment interest rates to 4% plus base rate.
In conclusion, it is crucial for self-assessment taxpayers to be aware of the deadlines and payment requirements. Missing the deadlines can lead to penalties and interest charges, making it crucial to stay organised and up-to-date with payments. If you are struggling to pay, contact HMRC as soon as possible to discuss your options.
- For those interested in managing their personal finance, subscribing to a newsletter on personal-finance matters related to property, interest rates, and other financial aspects could be beneficial.
- When it comes to property investment, it's essential to consider the potential impact of future interest rate changes on loan repayments and overall investment returns.
- To avoid late payment penalties and interest charges, self-assessment taxpayers should keep property income, rental income, investment income, and other sources of income in mind when making their second payment on account.
