With the second payment on account for the 2021-22 tax year due by 31 July 2022, Self Assessment taxpayers may wish to set up a budget payment plan to help manage their tax payments.

As the cost of living continues to rise self-employed taxpayers and landlords may not yet be focused on their next tax payment due at the end of July, let alone what tax they will owe by 31 January 2023. Good intentions about putting money aside throughout the year to pay their tax bills may have fallen away as they struggle to pay for basic necessities.

Whilst most are aware of HMRC’s Time to pay option, many taxpayers paying tax under Self Assessment may not be aware that if they are up to date with their tax payments they can set up an advance budget payment plan with HMRC.

  • They can make weekly or monthly payments towards their next tax bill instead of having to pay in a lump sum on 31 July and 31 January or arrange for Time to pay when those payment dates come around and they simply don’t have the funds.
  • Once the plan is set up it can be paused for up to six months.
  • Payment can be made by direct debit so that it automatically goes out of your bank account every week or month.
  • Paying in advance instead of needing time to pay avoids late payment interest charges.

Self-employed taxpayers may also wish to consider filing their 2021-22 tax return earlier than usual to provide certainty about their next payment on account, remembering that filing before the deadline does not bring forward the tax payment deadlines or extend the enquiry window.

Useful guides on this topic

2021/22 Self Assessment tax return toolkit
A tax return toolkit for the year ending 5 April 2021. 

Time to Pay agreement
Business and self-employed taxpayers with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Penalties: Late Payment
What penalties are charged when tax is paid late? 

Collecting tax debts via PAYE
When can HMRC collect tax debts via PAYE? What are the limits?

External link

HMRC Pay your Self Assessment tax bill 

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