Reducing payments on account

Payments on account are normally equal to 50% of the previous year’s net liability. A claim can be made to reduce your payments on account, if appropriate, although interest will be charged if your actual liability is more than the reduced amount paid on account.

Do not wait until it’s too late – please keep us informed of any factors which might affect your tax liability.


We can only suggest business solutions if you tell us in good time about any issues facing your business.


Payments on account will not be required where the net liability does not exceed £1,000, or where the self assessment tax/NIC is less than 20% of the previous year’s total income tax/Class 4 NIC liability (instead, the full liability is due on 31 January after the tax year).

Case Study 3

Isabelle is self-employed. Her accounts are made up to 31 August each year. When we prepare the 2010 Return we will be including her profit for the year ended 31 August 2009, and that is the profit which will be taxed for 2009/10.


Isabelle’s payments on account for 2010/11 will automatically be based on the 2009/10 liability.


If we know that Isabelle’s profits for the year to 31 August 2010 are significantly less than the previous year, we can discuss the figures, perhaps even prepare the annual accounts, and make a claim to reduce Isabelle’s 2010/11 payments on account, easing her cash flow by reducing the tax payments due in January and July 2011.


If you need help with your accounts, give us a ring today 0845 258 1445.