Households across the UK are being urgently reminded to steer clear of a “costly” 7.75 per cent tax charge as an important HM Revenue and Customs (HMRC) deadline looms large.
Many Britons are due to make their second ‘Payments on Account’, which must be completed by July 31, 2024. Missing this important deadline will result in late payment interest, adding another financial burden.
Currently, this interest rate stands at a hefty 7.75 per cent, providing a strong incentive for people to ensure their bills are settled on time.
Late payments on account also attract penalties, adding further strain on those who miss the mark.
If you’re worried about meeting this crucial deadline, HMRC offers a Time to Pay arrangement. But what is ‘Payment on Account’?
This is an advance payment system designed to help taxpayers manage their bills. Typically, it’s used by self-employed individuals making Class 4 National Insurance contributions, reports GB News.
Each year, two payments on account are required, based on the previous year’s tax bill. The first deadline falls on January 1, with the second swiftly approaching on July 31.
After submitting a self-assessment return, if your payments on account don’t cover the full tax amount, you’ll need to make a “balancing payment” the following January. However, if these payments exceed your tax liability, expect a refund.
This upcoming deadline mostly concerns the self-employed, though there are exceptions. For example, those who owe £1,000 or less can settle it in a single payment.
Also, if over 80 percent of your tax bill has already been paid, this deadline may not apply. Those anticipating a lower tax bill compared to the previous year should contact HMRC to adjust their payments.
Stevie Heafford, a tax partner at HW Fisher, said: “The payments on account scheme is designed to help people better manage the cost of their tax bill by splitting the amount into two payments and spreading the payments across the year.
“However, missing the deadline can be a costly mistake to make. Fortunately, there is still one week to go until the second payment on account is due, giving people plenty of time to work out what they owe and make the necessary payment.”
