Reducing Payments on Account

Payments on account represent 50% of the individual’s net tax liability for the previous year. All individuals are liable to make these payments unless their net tax liability is less than £1,000, or more than 80% of the tax due was deducted at source.

Given that your income is likely to be significantly less than the previous year which the payments on account are based on, you can claim to reduce these payments. The amount that you reduce these to should reflect your estimation of your tax liability for the next tax year.

However, be aware that if it is later found that you have overestimated the fall in your income, and consequently reduce the payments on account by too much, you will be liable to pay interest on the difference between the amounts paid as payments on account and the amount due.

We can help you work what your liability will be and assist you in amending your payments on account, so call us on 01467 469011 or complete our contact form here to arrange your free initial consultation.

Date published 30 Jan 2020 | Last updated 25 Sep 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.