For many taxpayers paying the tax due by 31 January is difficult and it can be a shock to new traders who will have to find 150% of their annual tax liability.
Three potential solutions to this problem are:
- Budget Payment Plan
Set up a Budget Payment Plan with HMRC to pay a small amount of tax by direct debit each week or month. Find out how to set up a Budget Payment Plan at https://www.gov.uk/pay-self-assessment-tax-bill/pay-weekly-monthly
You need to be fully up to date with your self assessment tax liabilities before you can start a payment plan.
- Reduce payments on account
If your profits for 2021/22 are below expectations, then it may be possible to reduce the payments on account for that year.
If your profits are above expectations when the 2021/22 tax return is finalised you will have to pay some interest on what you should have paid on 31 January 2022 and 31 July 2022, but that may be better than having to find the money now.
Contact us to arrange to reduce your payments on account.
- Time to pay arrangement
Apply for a Time to Pay Arrangement with HMRC. Visit our blog ‘time to pay self-serve limit remains at £30,000’ which gives more detailed information.
As always, please contact us if you need any further information or assistance about any of the above.