Missing the July 31 Deadline Could Get You 7.75% Penalty!

The Self Assessment taxpayers are required to make advance payments on their tax bills by midnight today, which is 31 July. A self-employed taxpayer pays the Self Assessment Tax Return bill on two accounts each year. 31 July is the second payment of your tax bill from the previous year’s business. Anyone who misses the deadline will be accounted for a payment penalty of 7.75% interest rate.

What Are Payments on Account?

The payments on account are advance payments on tax bills for self-employed taxpayers. The payments on accounts are made twice every year. However, you can avoid making this payment if:

• The Self Assessment tax bill of the previous year was less than £1,000
• You paid more than 80% of the tax owed in the previous year

If these conditions do not apply, you must make these payments twice every year. Each payment is half the tax bill of the previous year. The first payment is made by midnight of 31 January, and the second payment is made by midnight of 31 July.

You can check your payment status by signing in to the HMRC gateway using your online account. If you overpay, HMRC will send you a refund. However, if you underpay, you will be charged interest.

What Will Happen If You Miss the Deadline?

An interest of 7.75% will be charged if you miss the July 31 deadline. A tax expert says that summer can be an expensive time for UK people, with holidays and childcare costs adding to the people’s budget. So, missing this tax deadline can be an added burden for taxpayers. Taxpayers who owe the sum to HMRC must arrange funds by now to reach the HMRC before the deadline.

Those who might struggle to pay the sum to HMRC can set up a Time to Pay arrangement with the tax authority. HMRC with work with the taxpayers and negotiate on the time to pay the sum you owe, such as affordable monthly payment options.

Also, if you have not paid the tax bill that was due on 31 January 2024 which was for the Tax Year 2022/23, a 5% penalty will be charged by HMRC. The 5% penalty amount will be charged on payments that are six months late. So, if you do not pay the bill to be paid on 31 July for six months, an additional 5% penalty will be charged. So, taxpayers need to understand these regulations and stay on top of the HMRC deadline to avoid any interest and penalty amount from being charged.

Conclusion

A self-employed individual must make payments on account twice a year. The deadline for the payments on account is 31 January and 31 July. If you miss the deadline, you will be charged a 7.75% interest which is at its highest in 16 years. Anyone who owes the sum to HMRC needs to make arrangements to reach the tax authority by midnight today.

For anyone struggling to make payments, HMRC has a Time to Pay arrangement scheme. An additional penalty sum can be imposed if you are late to make the payments. So, using professional help from tax advisors would be a better option to be aware of the regulations of HMRC.