A Chance to Reduce Your Tax Bill
If you’re a sole trader, then your second Payments on Account (POA) deadline is on the horizon, on 31 July, when you are expected to pay half of your estimated tax for the 2023/2024 tax bill. This figure, which appears on your most recent tax statement (which you can access online), is based on the profit you reported in your 2022/2023 tax return.
If you are worried about the looming bill or you’ve got other things you’d rather spend your money on, there is a way to potentially reduce it. When calculating your POA – which are payments made towards your following year’s tax and NI contributions – your tax bill for 2022/2023 will have been divided in half.
If you have been organised enough to have already submitted your accounts for 2023/2024 and you know that you had less self-employed income during that period than in the previous 12 months, it is possible to approach HMRC and ask them to reduce your payments on account.
You do need to be sure of your numbers though, so getting your accounts up-to-date and submitting them to us in good time is the best way to do this. If you simply approach HMRC without being sure of the numbers and have reduced them too much, you could face interest charges and even a penalty.
If you file your accounts online, there is a section ‘reduce my payments on account’.
It’s important to note that you do need to tell HMRC that you’d like to reduce your payments on account – don’t just send them less money by 31 July or assume that they have checked what you’ve already submitted post-April this year. If you don’t get in touch, it will simply show up that there is an amount outstanding and you’ll be charged interest.
If you’ve got any questions at all, then please do contact us on 01892 513515 or info@lewisandco.biz