The dates you must pay tax to HMRC during the year depend on the amount of tax owed and the type of the business in question i.e. whether it is a limited company or sole trader business.
For a sole trader whose tax liability is less than £1000.00, the amount owed is paid in full once a year before 31st January. However, if the amount of tax owed to HMRC exceeds £1000.00 then payments on account are introduced and the individual must pay their tax in two annual instalments. Payments on account are made twice a year before 31st January and 31st July and contribute towards the tax HMRC estimates will be owed the following tax year. For example, if an individual owed £1000.00 in tax they would pay the amount as normal before 31st January 2011. However, based on this tax liability, HMRC would assume the individual would owe the same amount next year meaning they would have to pay an additional £1000.00 in payments on account. Half of this would be paid with the original tax on 31st January, bring the amount due to £1500.00, and the remaining £500.00 would be due at the end of the following July. If the tax owed the subsequent year is less than or exceeds the amount the individual paid on account, HMRC would either reimburse them or charge extra in accordance with this.
For limited companies, corporation tax owed to HMRC is paid in full once a year and the deadline to pay it is exactly nine months after the last day of the company’s financial year. For example, if a company’s financial year runs from 1st April- 31st March, the deadline for it to pay HMRC the corporation tax it owes would be 31st December. This rule applies to all company’s that profit up to £1.5 million.
At The Accountancy Partnership, we advise our clients on when their tax is due to be paid and can offer help and advise on budgeting for payments on account. If you would like to discuss your requirements or request a quotation please do not hesitate to phone or email us, or alternatively, you can simply use the live chat link available.
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MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.