Once you have filed your Self-Assessment Tax Return you can expect to receive your statement of account within 45 days of a payment becoming due. If you have filed your return on-line, you will see a breakdown of any tax owed after completion.
Balancing Payments
Any balancing payment that you owe from the previous year will be added to your tax statement.
Example
For the tax year 2007-08 your tax bill was £5,000. You have made payments of £2,500. The balancing payment of £2,500 is due for payment on January 31st 2010. If there had been any unpaid tax from the previous year/s, this would be added and would include any interest and penalties.
Payments on Account
Tax due to be paid under £1,000 will not have to be paid on account; a single payment will be due on 31st January 2011 for the tax year 2008/9.
If it is over this amount, it will be spread over two payments.
Example
For the Tax year 2008-09 your tax bill was £8,000. Payments on account are assessed for the current tax year 2009-10, at the amount of the 2008-09 tax bill.
You will have a payment on account of £4,000 on 31st January 2010 and £4,000 on 31st July 2010.
When your tax return for 2009-10 is filed on 31st January 2011, any payments on account are deducted from tax due in that year.
Application to reduce Payments on Account
If you have received a tax bill with payments on account and you think that your income for the next year will be less, therefore less tax being owed, you can apply to have the payments on account reduced. If you use on-line filing you can make an application on the Government Gateway. If you do not then you need to complete from SA303 and send to HMRC. If it is found that later you owed more tax than you have paid on account, interest will be chargeable and penalties may be applied.
Penalties and Interest
Any balancing payments for the previous year that have not been paid by 31st January will be charged a daily interest of 3% (applicable September 2009) plus an automatic 5% surcharge. If this still has not been paid by the second payment date of 31st July a further 5% surcharge will be added.
Where a self-assessment return is filed after the deadline an automatic surcharge will be charged of £100. If you leave filing your return until 31st January 2010 and should have paid tax by that date you will get an automatic 5% surcharge and daily interest of 3%.
Please refer to ourguide on Self-Assessment Tax Returns in our knowledgebase.