How to make disburse Payment on Account?
Once you complete your Self Assessment online, you will be granted the opportunity to make Payment on Account at the same time as your balancing payment for the preceding tax year. In case you file your return on paper, you will be given a paper bill in conjunction with a Bank Giro form that you can use to make a payment.
HMRC is now dedicated to transferring the bulk of the taxpaying process online. Therefore, they are encouraging taxpayers to file and make payments online wherever possible. As a responsible citizen and taxpayer, you can do this in a secure manner on the HMRC website or by downloading their taxpaying software.
Cutting down your Payment on Account
Earnings of people who are self-employed are expected to fluctuate from year to year. If you deduce that your revenue for the following tax year will be lower than in the preceding tax year, you can submit an application to have your Payment on Account reduced.
If you calculate your own tax, you should locate Tax Calculation pages of your return and tick off box 9 if you wish to decrease your Payment on Account. You can then write the amount you intend on paying in box 10 and state the reason that explains your side in box 16. If the taxman works out your bill, you will receive a copy of form SA30 along with your bill. You will have to fill this out so as to reduce your Payment on Account.
In practice, many people opt to do this if they are having trouble making payments on their tax bills. A number of individuals reduce their Payment on Account assuming that they will be in a better financial position at a later stage and as a result will find it easier to settle the balance amount of their bill. While you are doing this, be very careful. Keep in mind that, if your income is the same or higher in the next tax year, you will still have to pay the same amount.
All you are actually doing is postponing the pain, rather than getting rid of it altogether. Another important thing to take note of is that underpayments will be subjected to interest. If you cut down your Payment on Account and it turns out afterwards that you have underpaid, you will have to pay interest on the accrued on the outstanding amount. This can contribute in significantly adding to the load of your tax bills. You can opt to save tax by using your pensions.
As is the case with all tax related matters, if you find yourself in confusion, contact us and we will break it down for you. You can opt for accountancy and tax services from us directly as we are well equipped to make it simpler for you. If you are facing any kind of difficulty in paying tax, it is essential that you act upon it quickly.
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