Beware the Tax Deadline: Pay by July 31 or Face the HMRC Squad
Leading audit, tax and business advisory firm Blick Rothenberg is sounding the alarm: if you’ve still got a looming bill with HMRC, you need to settle it by 31 July or you’ll start earning interest and fines faster than you can count your coins.
Interest Drama: From 3.5% to 8.25%
Since May 2022, HMRC has spiked the late‑payment interest rate from a modest 3.5% to a whopping 8.25%. Their mission? To make sure everyone who owes money pays up. If you owe money for the 2024/25 tax year, the sooner you pay, the better.
Payments on Account – The Two‑Step Dance
- What are they? Two instalments that help you cover the next tax bill. Think of it as a “pay now, pay later” plan.
- Example: If you owed £10,000 for your second instalment and you waited until 31 Dec 2025 to pay, you’d be looking at almost £350 in late‑payment interest alone.
- How it’s calculated: Based on your previous year’s income tax liability. If your 2024/25 income looks lighter than last year, you can slash your instalments. But cut them too hard, and HMRC will swoop in with interest and penalties.
Check Your Final Numbers After the 2024/25 Year Wrap‑Up
Now that the year’s out, if you or your accountant filed a “reduce my payment” request, double‑check that it’s still spot‑on. If your actual income was lower than you guessed, you might want to adjust those payments—otherwise, interest keeps piling up since 31 Jan 2025.
Early Bird Gets the Refund
Submit your tax return early, and you’ll be able to confirm your July payment is just right — no guessing and no extra cash sitting on the table. Too much, and you’ll wait until the return’s processed to claim a refund.
Who Needs Payments on Account?
- Low liability: If your 2023/24 tax bill was £1,000 or less, you’re off the hook.
- Source‑deduction: If you’re getting most (over 80%) of your tax paid through PAYE, you don’t need these instalments.
- Capital gains: CGT can be ignored when deciding on instalment payments.
- Typical payers: High investment income, rental profits, or the self‑employed. They’re usually the ones stuck in the payment‑on‑account dance.
Struggling? Talk to HMRC
Financial hiccups? Reach out and ask for a payment plan. HMRC might let you spread your tax bill over a more palatable timeline, easing the pinch.
Ready to get your tax statements tidy and avoid the NHS tax tax? Stay informed and act before July ends!
