Understand your Self Assessment tax bill

Our experts help you to make sense of your Self Assessment tax bill

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

When does your tax bill arrive?

Once you have filed your tax return, you will receive your tax bill. When you receive it all depends on how you filed your Self Assessment tax return. If you filed your tax return online, you will get your tax bill much quicker. Once you have finished filling in your Self Assessment tax return online (but before you have filed it), you can find out how much tax you owe by clicking on the ‘View your calculation’ section. After you submit your tax return you will get your final tax calculation although this can take up to 72 hours to be available in your account after submission of your tax return.

If you fill in a paper tax return, HMRC will send you your tax bill by post.

It is always a good idea to keep hold of your tax calculation (also known as a SA302) because it can come in handy, for example, if you are applying for a mortgage as a self-employed person.

Understanding your tax bill

Once you receive your tax bill, it will show you how much tax you owe for that tax year and will explain the payment deadlines for paying your tax bill. If you owe any tax from the previous tax year it will also be shown on your tax bill and will be called a ‘balancing payment’ on your bill.

If your bill is greater than £1,000 you might see an additional payment listed on your bill – this will be a ‘payment on account’. This will be a payment towards your next year’s tax bill.

If you have already made payments on account last year towards this year’s tax bill, you will need to deduct this from your tax bill to work out how much you owe HMRC. You can check how much you have paid on account by clicking on the ‘View statements’ section of your account – this will show you all of the payments on account you made.

When should you pay your tax bill?

To avoid any penalties or being charged interest, you need to make sure you pay your tax bill on time. The deadline (unless you have been specifically informed otherwise by HMRC) is midnight on 31st January following the tax year you are paying for.

If you fail to pay your tax bill on time, HMRC will issue a penalty fine as well as charge interest for the days you are overdue with your payment. If you think you have a reasonable excuse for being late with your payment, you can appeal HMRC’s decision but be warned that what HMRC considers to be a reasonable excuse is quite limited.

What are payments on account?

You might be expected to pay what HMRC call ‘payments on account’ – these are advance payments towards your next tax bill (including your Class 4 National Insurance contributions if you are self-employed).

If HMRC have informed you that you need to make payments on account, you will have to make 2 payments on account each year. If either of the following circumstances apply, you probably won’t be expected to make payments on account:

  • If your last Self Assessment tax bill was less than £1,000
  • If you have already paid more than 80% of the tax you owe – maybe through your tax code or because you have already had tax deducted from your savings by the bank.

Each payment on account is expected to be 50% of your previous year’s tax bill. The payment dates for these additional payments are 31st January and 31st July. For example, if your last tax bill was for £1,500 then you would be expected to make 2 ‘payments on account’ for the following tax year – each one for £750. When your final tax bill arrives for that tax year, if you still have additional tax to pay after your payments on account you need to make a ‘balancing payment’ by 31st January following the end of that tax year to settle your tax bill.

To explain how these different payments work out, let’s look at an example. You receive a tax bill for 2016/17 of £4,000 and you have made 2 payments on account last tax year of £1,000 each (£2,000 in total). So, you still have £2,000 left to pay as a ‘balancing payment’ and then you will have to pay £4,000 in ‘payments on account’ for your following year’s tax bill. This means that you will have to pay £4,000 before midnight on 31st January (£2,000 balancing payment and £2,000 for your first payment on account). You will then pay a further payment on account of £2,000 on 31st July. If your tax bill for 2017/18 is greater than £4,000 (the amount you will have paid in payments on account) then you will have to pay a ‘balancing payment’ to settle that year’s tax bill.

‘Payments on account’ only take into account Income Tax and National Insurance contributions. If you owe Capital Gains Tax or student loan repayments, you will pay those in your balancing payment.

How can you check your payments on account?

If you’re not sure if you have made any payments on account or you can’t remember how much you paid, you can log onto your online account and check your Self Assessment statement. When you click on ‘View statements’ you will see the payments on account you have already made as well as any payments you need to make towards your next bill.

What happens if you know you won’t need to pay as much tax next year?

If you know that you haven’t earned as much as last year or that you won’t need to pay as much tax as you did in the previous tax year you can contact HMRC and ask them to reduce your payments on account. To do this you either need to log into your online account and click on the ‘Reduce your payments on account’ section or you can send form SA303 to your local tax office.

What happens if you overpay or underpay?

If your tax bill is more or less than you expected it to be, you might have paid the wrong amount in your ‘payments on account’. If you have paid too much and your tax bill has turned out to be lower than expected, HMRC will send you a refund. However, if you have underpaid because you owed more tax than you expected, you will be charged interest by HMRC on the amount you have underpaid by.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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