Understanding the 31st July Deadline for Paying Income Tax and National Insurance

CREATED BY ROGER EDDOWES Published: 07/07/2025 @ 09:00AM #SelfEmployedTaxTips #IncomeTaxDeadlines #MinimisingTaxLiabilities #PaymentsOnAccount #TaxRequirements

Although the 31st January is the usual date for paying Income Tax and National Insurance contributions in full, for many self-assessment taxpayers, the 31st July is another vital date to remember for those who need to make a Payment on Account ...

Deadline looming near, Taxes and NIC to be paid, Wallet feeling light

As the 31st July deadline approaches, self-employed taxpayers must take proactive steps to ensure they meet their obligations under the self-assessment (SA) system. The importance of this specific date is underscored by the requirement for some taxpayers to make a second payment on account (POA).

This POA is based on their prior year's income tax
and Class 4 National Insurance contributions!

Taxpayers should first ascertain whether they are required to make a POA by reviewing their 2023/24 self-assessment tax return. If they have submitted their return, they can easily access their online account or self-assessment statement, which will indicate their POA obligations.

The necessity to comply with the 31st July deadline for paying income tax and NIC stems from the fact that each POA equals 50% of the taxpayer's total SA liability from the previous tax year. Therefore, any discrepancies in income or tax liability for the current year become crucial.

In the lead-up to the deadline, it is prudent for taxpayers to evaluate whether they can make a claim to reduce their Payment on Account. For individuals anticipating lower income or other changes in their financial situation, this option may reduce the amount they owe.

For example, a self-employed individual who paid a total of £6,504 in the previous year might estimate their liability for the current year at £5,052. By making a claim to reduce their payments to £2,526, they can ease their financial burden and adjust their expenses to their current capacity.

Taxpayers must also consider the consequences of failing to comply with the July 31st deadline. HMRC charges interest on late payments, currently set at 8.25%. Taxpayers can incur penalties if they submit incorrect claims, making it imperative to ensure accuracy and compliance. Should a claim to reduce the POA be excessive, interest will be charged on the underpayment. Any overpaid taxes will be refunded with interest at a rate of 3.25%.

Given the current economic climate, where fiscal drag has led to more taxpayers being liable for making payments on account, the importance of paying the correct amount at the right time cannot be overstated. The latest figures from the Office for National Statistics reflect a significant increase in self-assessment tax receipts, heightening the need for preparation and adherence to HMRC's compliance standards.

The 31st July deadline for paying income tax and NIC
needs careful planning and consideration!

By understanding payment obligations, assessing eligibility for claims, and adhering to best practices, taxpayers can navigate their responsibilities with greater ease and confidence. Awareness of these elements is essential to foster an informed taxpayer community.

As always, the Business Godparent stands ready to help you.

Until next time ...

ROGER EDDOWES
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

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