If you are due to make your second payment on account to HM Revenue & Customs come 31 July, but you feel this year’s earnings will be lower than last year’s, read on.
Payments on account are based on your tax liability for the previous year. You paid the equivalent of half last year’s liability on 31 January and the remaining half is due on 31 July.
If you expect your 2009-2010 income to be less than your total income for last year then you may be able to reduce your July payment. This is a worthwhile exercise if you know your earnings will be lower this year, but you need to be careful! Reduce it too much and you’ll be liable for interest on the difference, and a possible penalty. If you are in doubt, contact us for advice before taking any action!
