The payment due in July is like an “instalment” for next year’s tax. HMRC will use your circumstances last year as a basis for setting these.
However, if you have good reason to believe that this year’s income will be lower than last year’s, you may apply to reduce your July payment. This must be done by 31st January.
Be aware that if you reduce your payments too low, HMRC will levy interest- but you can amend your application if you discover this in time.
Alternatively, you could just prepare and submit your tax return. This will then trigger the comparison of these estimated payments (called Payments on Account), with your actual tax liability. So any over or underpayment will be calculated.
Please feel free to contact your local TaxAssist Accountant if you would like some help with the completion your claim to reduce your Payments on Account or your tax return.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.