BDO warns self-employed and landlords ahead of 31 July tax payment deadline
BDO warns self-employed and landlords ahead of 31 July tax payment deadline
Underpaying will mean late payment interest of 7.75%
Self-Assessment taxpayers who are required to make advance payments towards their bills are being urged to pay before midnight on 31 July to avoid late payment interest charges which are currently at a 16-year high of 7.75%.
Self-Assessment taxpayers are required to make two payments on account every year, unless their last tax bill was less than £1,000 or they paid more than 80% of the previous year’s tax owed at source , for example through PAYE.
Each payment is half the previous year's tax bill, with payments due by midnight on 31 January during the tax year and 31 July after the end of the tax year. If there is still tax to pay after the payments on account are made, there will be a balancing payment due by midnight on 31 January in the following year.
Commenting ahead of the deadline, Elsa Littlewood, a private client tax partner at accountancy and business advisory firm BDO said:
“Summer can be an expensive time of the year with holidays and childcare costs weighing on people’s budgets. But those who miss the deadline or underpay should be aware that a 7.75% late payment interest rate will be applied to all outstanding monies owed after 31 July. This can have a dramatic impact on your overall tax bill as your debt to HMRC can ramp up very quickly indeed.
“Those affected will need to ensure they have available funds and arrange the payment in sufficient time to reach HMRC before the deadline.
“If you are sure your tax bill is going to be lower for 2023/24 than the prior year - for example you have already prepared your 2023/24 tax return - you can go online to ask HMRC to reduce your payments on account.
“For those who are going to struggle to pay, there is the option of setting up a Time to Pay arrangement with HMRC. For debts up to £30,000 this can be done fairly easily online.
“It is worth also remembering that if you have not yet paid your tax liability that was due on 31 January 2024 - ie for the 2022/23 tax year - a 5% penalty can be charged for payments that are six months late. HMRC can also charge penalties if the tax return is filed late. To mitigate penalties you should look to bring any outstanding filings up to date as soon as possible.
“Unfortunately, scammers often take advantage of people at this time of year, so it is essential you are certain you are making the payment to the proper HMRC account.”
ENDS
The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 8,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
frank.x.shepherd@bdo.co.uk
07812 463601
Self-Assessment taxpayers who are required to make advance payments towards their bills are being urged to pay before midnight on 31 July to avoid late payment interest charges which are currently at a 16-year high of 7.75%.
Self-Assessment taxpayers are required to make two payments on account every year, unless their last tax bill was less than £1,000 or they paid more than 80% of the previous year’s tax owed at source , for example through PAYE.
Each payment is half the previous year's tax bill, with payments due by midnight on 31 January during the tax year and 31 July after the end of the tax year. If there is still tax to pay after the payments on account are made, there will be a balancing payment due by midnight on 31 January in the following year.
Commenting ahead of the deadline, Elsa Littlewood, a private client tax partner at accountancy and business advisory firm BDO said:
“Summer can be an expensive time of the year with holidays and childcare costs weighing on people’s budgets. But those who miss the deadline or underpay should be aware that a 7.75% late payment interest rate will be applied to all outstanding monies owed after 31 July. This can have a dramatic impact on your overall tax bill as your debt to HMRC can ramp up very quickly indeed.
“Those affected will need to ensure they have available funds and arrange the payment in sufficient time to reach HMRC before the deadline.
“If you are sure your tax bill is going to be lower for 2023/24 than the prior year - for example you have already prepared your 2023/24 tax return - you can go online to ask HMRC to reduce your payments on account.
“For those who are going to struggle to pay, there is the option of setting up a Time to Pay arrangement with HMRC. For debts up to £30,000 this can be done fairly easily online.
“It is worth also remembering that if you have not yet paid your tax liability that was due on 31 January 2024 - ie for the 2022/23 tax year - a 5% penalty can be charged for payments that are six months late. HMRC can also charge penalties if the tax return is filed late. To mitigate penalties you should look to bring any outstanding filings up to date as soon as possible.
“Unfortunately, scammers often take advantage of people at this time of year, so it is essential you are certain you are making the payment to the proper HMRC account.”
ENDS
Note to editors
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.The organisations we work with are Britain’s economic engine; entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 17 offices across the UK, employing 8,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 115,000 people working out of 1,776 offices worldwide. It has revenues of US$14bn.
Contacts
Frank Shepherdfrank.x.shepherd@bdo.co.uk
07812 463601