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Payments on Account crop up and are calculated within one’s Self Assessment (otherwise known as a Personal Tax Return). Payments on Account are advanced payments towards your personal tax liability for the following tax year and at times, Directors of Limited Companies are required to make these payments.
You may be liable to make a payment on account if your tax liability for the previous tax year was £1,000 or more, or alternatively, if 80% of your tax liability was not collected at source.
If you are required to make payments on account this amount will be split into two payments equalling half the amount of tax paid of the previous tax year.
E.g. You paid £1,600 tax for the 2013/2014 tax year (due 31st January 2015) – for the 2014/2015 tax year you the following may be required of you; – On 31st January 2015 you will be required to pay £800 – On 31st July 2015 you will be required to pay £800
For more information please call our Personal Tax Team on 01707 871610 (option 2) or request a call back.
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The Churchill Knight blog is regularly updated with helpful content for contractors and freelancers – especially articles that answer the most frequently asked questions about umbrella companies! Please pop back shortly to see the latest articles written by Andrew Trodden (Marketing Manager) and Clare Denison (Marketing Executive).