Reducing your 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.

Please do not wait until it’s too late – keep us informed of any factors which might change 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 each payment works out at less than £250, 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). There is also a system of interest and surcharges to encourage prompt payment.

For example, if you do not make your full 2006/07 balancing payment by 28 February 2008, HM Revenue & Customs will add a 5% surcharge as well as the interest which will be charged from 1 February 2008. Delay until after 31 July 2008, and a further 5% surcharge in addition to the interest will be added. And interest is charged on outstanding surcharges, as well as on unpaid tax and NICs.

Key Points
Planning your business start-up
Finding investors and obtaining finance
Putting you in touch with patent and intellectual property law specialists
Helping you to comply with Government regulations and avoid fines, surcharges, penalties and interest
Timing capital and revenue expenditure to maximum tax advantage
Improving your invoicing and debt recovery systems
Involving family members in the business
Developing a plan for tax-efficient profit extraction
Improving profitability
Protecting your business from financial disaster
Valuing your business
Minimising employer and employee NIC costs
Minimising tax costs, enabling you to keep more of the profit your earn
Identifying and valuing unpaid bills and unbilled work at the year end
Changes in your business and in your personal life
Selling your business and grooming your business for sale
Preparing yourself and your business for your exit, succession or retirement

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• Made Simple Group