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Tax Bills and Payments On Account; Everything you need to know!

Abul Nurujjaman, 

The tax system in any country, particularly in the UK, isn t very complicated theoretically speaking, but in practice, it is the other way around. The echoes at the tax arena are filled with the words like self-assessment, tax bills and payments on the account but most of us actually don t know these processes in detail.


Taxes are to be paid by the citizens in order to provide strength to the country, but at the same time, these taxes are due on earnings, regardless the means. In this article, we would like to educate our readers how they can stay away from penalties, financial challenges and any other kind of inconvenience that could occur down the road.


Self Assessment Tax Bills


As soon as you file your tax return, whether, in paper or online, you ll get your tax bill calculated before the submission of your tax return. This tax bill will appear in the "View Your Calculation" section if you are filing your tax return online, you ll get your tax bill by post if your tax return was done on paper. However, your final tax calculation can take up to 72 hours. Now your bill will include the tax you owed for the previous year, which is called the "Balancing Payment". If the amount exceeds £1,000, you ll need an arrangement called Payment On Account.


What Are Payments On Account?


The Payments On Account are a very significant part of the self-assessment system valid in the UK. The payments on account are advance payments that divide the total cost of your tax bill into two installments. The system was introduced to save people from being indebted to HMRC. However, this is the part where you might need an assistance from tax specialists, the ones that have proven abilities and exceptional expertise in the Accounts and Legal. Taj Accountants has a team of taxation experts who have been providing unconditional support and assistance to small businesses in London in self-assessment, tax bill, and payments on account. It is advisable for you to get in touch with them as soon as you can, they will not only pave the smooth road for your tax return, tax bill and payments on account but will also provide an expert advice on planning in advance and saving you from overpaying.

Prerequisites of Payments On Account


The payments on account are each half of the total tax due for the previous year and are made on 31st January and 31st July respectively. The payments on account system ensures the ease of the taxpayers but there are certain rules that must be kept under view. You ll only have to make payments on account if:
Your previous year s tax dues exceed £1,000
You weren t able to pay 80% of the total tax due in the previous year.

Some Useful Information On Payments On Account


You can check the status of your payments on account by logging in your HMRC online account. Payments that have been made and the payments that are due on the next tax bill etc.
Additionally, you can request for a reduction in your payments on account to HMRC if you assess your tax bills to be lower than earlier. Another important aspect is that underpaying results in penalties and in case of overpaying, HMRC refunds the overpaid amount.


The above-mentioned details are substantial for taxpayers but they are not an alternative of accountants, so you can visit Taj Accountants and get in touch with financial advisors who can maximize your benefit on tax bills and payments on account.


Let us give you the following example to elaborate how payments on account works


If you have a bill of £2,000 and your two payments on account in the previous year of £600 each making the total of £1,200, this means that the tax to be paid by 31st January Midnight is £1,800.


This will include:


The balancing payment of £800 that is £2,000 minus £1,200 for the previous year
Plus the first payment on account that is £1,000(half of your tax bill for the present year) payable on 31st January


The second payment on account will be £1,000, payable by Midnight 31st July.
If your tax bill for the current year is more than £2,000 (the sum of your 2 payments on account), you ll have to make a balancing payment by 31st January of the new year.

Disclaimer: The information provided in this blog is brought to you by Taj Accountants. As you are reading this blog of your own free will, any information taken from this blog is at your risk. Before using the information provided to apply, to your business seek professional or legal advice.Taj accountants will not be liable for any damages.

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