News added on 20.06.2019

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Income tax

HMRC happy to wait until next year for 2018/19 payments on account

An issue with HMRC’s systems means that many individuals do not need to make the income tax payment due in July. Does this apply to you?

Who is affected? Individuals that have a certain amount of income that is not taxed at source usually have to make two payments on account in advance of the tax return submission deadline. For the 2018/19 tax year, the first instalment was due by 31 January 2019 and the second is due by 31 July 2019. Landlords and the self-employed would typically make payments on account and some find it difficult to manage their money because the payments do not always match their cash flow. 

HMRC glitch.  This year there is an error in HMRC’s systems which means that some self-assessment (SA) accounts are showing that the payments on account for 2018/19 are not due. If this applies to you there is likely to be a credit balance on your SA account, equal to your first payment on account. HMRC has confirmed that if you do not receive a statement of account letter during June or July, payments on account have not been created in its systems and you do not need to do anything about it. The actual tax liability for 2018/19 will instead be due by 31 January 2020 and HMRC will not charge late payment interest. However, if payments on account were created (for example if you or your agent contacted HMRC and asked for the payments to be set up) then your second payment on account is due by 31 July 2019 and interest will be charged on late payments.

What action can you take? Firstly, it would be sensible to check your SA account online; you should be able to see whether a payment is due by 31 July. If a payment is not due then you do not need to do anything and can enjoy the cash flow benefit for six months. Your SA account should show a credit balance equal to your first payment on account. As the payment is not due, technically this should be repayable, however, HMRC’s communication is silent on the matter. Where an SA account is in credit, HMRC has been known to sporadically make repayments. You should therefore monitor your SA account closely and ensure your address details are up to date. Remember that any refund of your first payment on account, whether you ask for it or not may have to be repaid to HMRC by 31 January 2020.

If you would prefer to make the payments as usual you can call HMRC on 0300 200 3310 and insist that it sets up 2018/19 payments on account on your SA record.

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