By Daniel Hunter
Self-assessment taxpayers who earned less in 2012/13 than the previous year may be able to pay less tax on 31 July, by working out their actual income for that year. The deadline is looming for the self-employed and others due to make their second income tax payment on account at the end of the month.
“Payments on account are calculated based on your tax liability for the previous year (2011-12),” says Andrew Shaw, a tax partner at Kingston Smith LLP. “Half is paid on 31 January and the remaining half on 31 July.
“In the current climate, individuals may find that their taxable income has reduced since the previous tax year and if that’s the case, they could really benefit by reducing the amount that is due for payment on 31 July. Taxpayers are advised to make a claim to reduce the payments on account online by 30 July.
“However, individuals should not be tempted to reduce their payments by any more than is justified, as this will give rise to an interest charge when their final tax bill for 2012/13 is calculated.”
Payments on account apply to individuals whose previous year’s tax liabilities were over £500 or if the tax on their non-PAYE earnings was 20% or more than the total tax due for the year.
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