3 ways to reduce payments on account
Payments on account need to be made by many taxpayers under the self assessment regime and are automatically calculated based upon the previous year’s tax liability.
The due dates for the payments are; 31st January within the tax year, and 31st July following the end of the tax year.
However, if a taxpayer has reason to believe that their tax liability will be lower than the previous year’s they can elect to reduce their payments on account. There are a number of reasons for doing so and a list of examples is shown below:
- You are eligible for additional tax reliefs: for example; you have undertaken an EIS investment
- You have undertaken tax planning so that your taxable income is lower: for example; you have carried out remuneration planning
- You have sold an income generating asset so your taxable income is lower: for example; you have sold a rental property
Failing any of the above, your second payment on account can be automatically reduced if your tax liability is lower than the previous year and you simply submit your self assessment tax return at an early stage.
Taylorcocks specialist team of tax advisers will be able to work with you to identify whether you can reduce your POA for the current year and in the future so come the 31st July more money is left in your pocket.