If you complete a Self Assessment tax return and make payments on account, you may have a key deadline approaching. The second payment on account for the 2024/25 tax year is due by 31st July 2025 and missing it could mean interest charges or added stress later in the year.
Here’s what you need to know to stay on top of your obligations and avoid any last-minute surprises ahead of the July 31st Self Assessment tax deadline.
Who Needs to Complete Self Assessment Tax Returns
Although tax is typically deducted automatically from wages and pensions, people and businesses with other income must report it in a Self Assessment tax return. While they’re commonly associated with people who are self-employed, there are several other reasons someone might need to complete one. You must send a tax return if in the last tax year (6th April to 5th April) you:
- were self-employed as a sole trader and earned more than £1,000 (before taking off anything you can claim tax relief on)
- were a partner in a business partnership
- paid Capital Gains Tax when you sold something that increased in value
- have untaxed income, such as; money from renting out a property, tips and commission, income from savings, investments and dividends or foreign income
What is a Payment on Account?
Payments on account are advance payments towards your tax bill for the current tax year. They help spread the cost of your tax by making payments in two instalments, with the first payment on account due by 31st January and the second by 31st July.
Each payment is typically half of your previous year’s tax bill. Then, once you’ve submitted your next tax return, you either pay the remaining balance if you owe more or get a refund if you have overpaid.
Do I Need to Make a Payment?
You’ll usually need to make payments on account if your last Self Assessment tax bill was over £1,000, or less than 80% of your income is taxed at source, for example, through PAYE. You can check your upcoming payments by logging into your HMRC online account and viewing your Self Assessment bill.
How to Prepare for the July Self Assessment Tax Deadline
Check your Payment Amount
It’s important to confirm what HMRC expects you to pay, as it might be higher than you expected. You can log in to your HMRC online account to see what you need to pay. This will include:
- Your second payment on account for the current tax year (usually based on last year’s bill)
- Any balancing payment from the previous year, if applicable
- Interest if a previous payment was missed or paid late
Plan Ahead for the Self Assessment Tax Deadline
If you haven’t already set aside funds, now is a good time to review your cash flow. Payments on account can sometimes feel higher than expected, so it’s worth double-checking the figure and ensuring you have enough to cover it. Even though there’s no late payment penalty for missing the Self Assessment tax deadline, interest starts building up straight away so it pays to act early. Planning ahead can also make your January 31st payment less of a burden, especially if your income fluctuates year to year.
It’s important to remember that the payment must reach HMRC by 31st July, not just sent by then – sending it on the deadline day doesn’t guarantee it will count as on time.
Keep Records
HMRC legally requires you to keep records of any income and allowable expenses so you can fill in your Self Assessment tax return correctly, so good record-keeping is essential. You should keep organised records throughout the tax year, of;
- Bank statements showing business transactions
- Receipts for purchases or expenses you’re claiming
- Invoices you’ve issued to clients or customers
- Mileage logs if you’re claiming for business travel
- Details of any other income, such as dividends, rental income, or savings interest
These records will help you complete your tax return accurately, justify any expenses or claims if HMRC asks, avoid over, or under-paying when payments on account are calculated and reduce the stress of preparing for deadlines.
Need More Time?
You should contact HMRC as soon as possible if you have missed a Self Assessment tax deadline or know you will not be able to pay a tax bill on time. If you’re struggling to pay the full amount, HMRC may allow you to set up a Time to Pay arrangement. This is a payment plan that lets you spread the cost over monthly instalments. You may be eligible for a Time to Pay arrangement if have filed your latest tax return if you owe £30,000 or less, are within 60 days of the payment deadline and do not have any other payment plans or debts with HMRC.
Need Help with the Self Assessment Tax Deadline?
At MMG Chartered Accountants, we are committed to helping you achieve your financial goals and secure a prosperous future. Schedule a consultation or call your local branch today to discover how we can empower you to take control of your financial wellbeing.