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Payment on Account means that you pay tax in two instalments:
It’s usually the self-employed (and very rarely landlords) who have to use Payment on Account.
If you’ve already paid more than 80% of your tax bill by January, don’t worry about Payments on Account. You won’t be charged again in July.
Basically, in your first year, you have to pay 150% of your tax bill in one go.
You can ask the HMRC to reduce your payment.
However, we recommend you pay the Payment on Account as it is.
If your profits are indeed down, then HMRC will refund you the difference.
You will be required to make a balancing payment by January 31st next year so your account is up to date.
Log in to your online account and click “View statements”.
You can find information on:
Once you submit your Self Assessment tax return, you are automatically enrolled in it.
The only exceptions:
If you don’t pay tax through PAYE, you’re self-employed and your tax bill is more than £1,000, you’ll have to pay tax again in July.
Here’s a visual guide to help you understand a little better.
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