Self Assessment taxpayers urged to meet 31 July payment deadline
Self Assessment taxpayers urged to meet 31 July payment deadline
HMRC currently consulting on more regular payments from Self Assessment customers
Self Assessment taxpayers who are required to make advance payments towards their bills are being urged to pay before midnight on 31 July to avoid late payment interest charges which are currently at 7.75%.
Self Assessment taxpayers are required to make two payments on account every year, unless their last tax bill was less than £1,000 or they paid more than 80% of the previous year’s tax owed at source, for example through PAYE.
Each payment is half the previous year's income tax bill, with payments due by midnight on 31 January during the tax year and 31 July after the end of the tax year. If there is still tax to pay after the payments on account are made, there will be a balancing payment due by midnight on 31 January in the following year.
However, in the future, HMRC may seek more regular tax payments from Self Assessment customers.
The tax authority is currently consulting on a proposal to bring tax payments closer to real time. This could involve more frequent payment cycles – potentially monthly or quarterly.
BDO has a number of concerns regarding the proposals which risk increasing cashflow pressures on the self-employed.
In particular, HMRC’s proposed reforms could cause challenges for those who receive irregular income or who struggle to get their invoices paid on time.
Elsa Littlewood, a private client services tax partner at accountancy and business advisory firm BDO said:
“Summer can be an expensive time for families with school holidays and childcare costs weighing on people’s budgets.
“Those who miss the deadline or fail to pay the full amount due should be aware that a 7.75% late payment interest rate will be applied to all outstanding amounts owed after 31 July. This can significantly increase the amount owed to HMRC as interest will continue to accrue while the liability remains outstanding.
“If you are sure your tax bill is going to be lower for 2025/26 than the prior year - for example you have already prepared your 2025/26 tax return - you can go online to ask HMRC to reduce your payments on account.
“For those who are going to struggle to pay, there is the option of setting up a Time to Pay arrangement with HMRC. For qualifying debts of up to £30,000, taxpayers may be able to apply for a Time to Pay arrangement online.
“It is also worth remembering that if you have not yet paid your tax liability that was due on 31 January 2026 - ie for the 2024/25 tax year - a 5% penalty can be charged for payments that are six months late. HMRC can also charge penalties if the tax return is filed late. To mitigate late filing and payment penalties you should look to bring any outstanding filings and tax payments up to date as soon as possible.
“In the future, it’s possible that Self Assessment taxpayers may be required to make more regular payments in real time.
“HMRC is currently consulting on accelerating the timing of tax payments. This raises a number of issues around whether tax may fall due before cash is received. There are also questions around how taxpayers will be able to manage the transition period during which they may be asked to pay for two years’ tax in one year.
“We will be responding to the consultation to raise the concerns of our self-employed and partnership clients as well as set out how the proposals may operate in practice based on our experience.
“In addition to settling the payment on account bill, 864,000 sole traders and landlords earning more than £50,000 from self-employment and property will need to send their first Making Tax Digital for Income Tax quarterly update by 7 August. Making Tax Digital is now a legal requirement and those taxpayers in scope should check they are signed up, that their software is compatible and their MTD summary is submitted on time.
“This is a busy period for self-employed taxpayers with lots to think about, so those in scope will need to devote some time and effort to making sure they remain compliant.”
ENDS
Note to editors
BDO LLP operates in 19 offices across the UK and Ireland, employing 8,500 people. It has revenues of £1.1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing (CR&O) services predominantly to the entrepreneurial, ambitious and growing mid-sized businesses that are driving growth in the UK and Ireland economies.
BDO LLP is the UK and Ireland member firm of the BDO Global network.
BDO Global
The BDO international network provides business advisory services in 169 countries and territories, with 95,000 people working out of 870 offices worldwide. It has revenues of US$11bn.
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