To avoid attrition with the HMRC you need to pay your self-assessment tax punctually regardless of whether they had to be calculated or not. However, this makes it quite hard to remember set dates due to other engagements or maybe the issues of handling money. Below are the most effective guidelines on how to pay self-assessment tax on time and be free from stress.
1. Mark Your Calendar
On this page, you shall learn the steps to pay your self assessment tax on time with knowledge of the following dates. Mark these in your calendar:Mark these in your calendar:
31 January: Last date for submitting your SA return and payment in line with it through online mode.
31 July: Second payment on account, where due.
It is advisable to take reminders a few days before these dates so that one could be well equipped.
2. Start Early
As most people find, placing things off until the last minute leads to a lot of stress and even a likelihood for mistakes. It is also recommended that you should start working on your self-assessment tax return right from the starting of the financial year. This saves your time and energy in compiling your return, and you have enough time to request clarifications in case of any ambiguity, in addition, you do not have to deal with the pressure of time when filing your returns.
3. Keep Your Records Organized
That is why documentations make the whole self-assessment process quite easier given that they have to be accurate and well arranged. Shred all unnecessary papers and maintain receipts, invoices and financial statements in a folder- whether it is online or physical. Ideally, it is a good idea to update this folder from time to time during the year especially when preparing for filing your return.
4. Estimate Your Tax Bill
Don’t calculate how much tax you’ll have to pay when the due date is approaching. This assists you to prevent the shocks and get an adequate reserve for the future. One can estimate such amounts with the help of the online tax calculator available on the HMRC website.
5. Consider Setting up a Separate Saving Account
It might be worthwhile to open a separate account for taxes only through which all the tax-related amounts are saved. The way to ensure that you will always have the cash when you are being called upon to make tax remittances is by setting aside a part of your income into this account periodically. This approach also assist you in preventing you from using such funds for out rightly spending on tax.
6. Direct Debit
Standing order is the best way to ensure that you tax is paid on time and this can be done with the HMRC. This will enable you to automate your payments and therefore will not make you miss the payment period. The only thing you should remember is to make sure you have enough money on the account to cover the tax payment when it’s due.
7. Double-Check Before Submitting
There is always the last chance to review all the information you have provided while doing self-assessment tax return before pressing the button ‘submit. Check that your numbers are right, the correct allowances and exemptions have been utilized and personal details are accurate. Any mistake as simple as a number can cause additional days or even penalty therefore it is advisable to spend adequate time reviewing the return.
8. Closing
Before closing a long-standing customer’s account, financial experts advise strongly that it is, or at least should be, an unusual practice to ignore payment on account.
If the amount of tax due with your return is over £1,000 then there is a possibility that you will have to make payments on account they are advanced payments toward the next tax year’s tax return. These payments are due in two installments: amortization; three of which are annual instalments and the other two which are when the year ends in June & one on 31 January and one on 31 July. Be sure to include these payments in your financial planning so that as not to hamper your flow of funds.
9. However if the situation persists seek for professional help
Self-employment tax can be quite complicated for some individuals and if this is the case with you then don’t worry there are many tax consultants that can be of help to you. It can be very beneficial to consult an accountant for the purpose of explaining to you any issues that are complicated when it comes to taxes, reviewing your tax return and helping you find out ways on how you can decrease your taxes. There definitely is a cost implication here but if, say, it will save you several times the amount you spend on it by averting a mistake or a deadline breach, then it will be worth the investment.