There are many options when it comes to paying your tax bill, including bank transfer, debit card, and direct debit.
Payment deadlines
The deadline to pay your balancing payment of tax due for the 2023 tax year is the 31st of January. This is also the deadline for the first payment on account for the 2024 tax year- please see these explained below, as they may not apply to you.
HMRC accepts payments towards your tax bill via:
Direct debit
Bank transfer
Telephone bank transfer
Debit card (this may be subject to fees)
At your bank
By cheque
Through your tax code
When making a payment, make sure to use the correct payment reference! This is your UTR number, followed by the letter K. If you are ever unsure, make sure to ask your accountant!
for more information on how to set up these payments, please visit HMRC's website: Pay your Self Assessment tax bill: Make an online or telephone bank transfer - GOV.UK (www.gov.uk)
If you are unable to pay your tax bill on time, make sure you contact HMRC. You can arrange a payment plan with them before the 31st of January, which will allow you to pay your tax bill in monthly installments. You can set this up by phoning HMRC debt management on 0300 200 3835.
Payments on account
HMRC will ask you to make payments on account if your tax bill exceeds £1000, and less than 80% of the tax due is not collected at source. These payments on account go towards the next year's tax bill. You will pay two payments on account, one on January 31st alongside this year's balancing payment, and the second on July 31st.
Payments on account are calculated as two halves of the previous year's tax bill. For example, if your 2023 tax bill is £2000, £3000 will be due on January 31st (the £2000 for 2023, and £1000 towards 2024's bill) and a further £1000 will be due on July 31st. If your tax bill for 2024 ends up being less than £2K, you may receive a refund for this overpayment, depending on whether further payments on account are due.
This is why it's important to try and submit your tax return before the second payment on account is due if you think your tax bill will be lower than the previous year, as it will prevent you from unnecessarily overpaying.
I hope this short post helps you understand more about your tax bill. If you do have any questions not covered by this article, make sure to contact us!