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Someone told me they don't pay any self assessment income tax in July, they just pay the full annual bill in January. Is this possible in the UK or is the July payment compulsory?

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  • According to this HMRC page, it's not always necessary... you should probably read that and if that doesn't answer your question, add more details about your specific case.
    – TripeHound
    Commented May 12, 2022 at 15:43

2 Answers 2

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Everyone who self-assesses for income tax is theoretically subject to making three payments in respect of a given tax year. Let's take 2022-2023 as an example:

  • A first payment on account in Janary 2023, i.e. before the tax year ends.
  • A second payment on account in July 2023, i.e. just after the tax year end.
  • A final balancing payment in January 2024, the same deadline as filing the tax return.

You are exempted from the payments on account if either of the following two conditions apply:

  • your last Self Assessment tax bill was less than £1,000
  • you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

Most taxpayers whose income is primarily from employment will meet the second condition because PAYE gets their tax roughly correct, and therefore they will only have to make the final balancing payment 8 months after the end of the tax year.

On the other hand most taxpayers with significant self-employed income won't be paying tax on it via PAYE and will therefore end up being subject to making payments on account.

The payments on account are an very crude estimate: they're based on the previous year's self-assessment return, i.e. 2021-2022 in our example. The final balancing payment corrects that estimate.

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  • Also while I haven't seen it explicitly stated anywhere, my experience is the payments on account seem ti be based purely on income tax with NI and student loan collected through the balancing payment. Commented May 13, 2022 at 22:39
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If submitting your tax return online you may be able to postpone until January the year after the tax year ends. That is the case for rental income "on the side", for example. HMRC deadlines here.

For income tax for self-employment it appears to work differently though, with July and January payments on account.

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