Payment on Accounts Navigating Tax Payments, Interest, and Penalties for 2024-25: Your Essential Guide
Understanding tax deadlines and payment obligations is crucial to avoid unnecessary penalties and stress. For the 2024-25 tax year, the self-assessment system remains structured around payments on account, balancing payments, and strict deadlines. Here’s what you need to know – and how to stay compliant.
Key Tax Payment Dates for 2024-25 – Payment on Accounts
- First Payment on Account: 31 January 2025 (50% of your 2023-24 tax liability).
- Second Payment on Account: 31 July 2025 (another 50% of your 2023-24 liability).
- Balancing Payment: 31 January 2026 (settling any remaining tax owed for 2024-25).
For example, if your 2023-24 income tax liability was £10,000 (after deductions), you’d pay £5,000 by 31 January 2025 and £5,000 by 31 July 2025. Your 2024-25 tax return, due by 31 January 2026, will determine if you owe more (a balancing payment) or are due a refund.
Remember: On 31 January 2026, you’ll also make your first payment on account for 2025-26 (50% of your 2024-25 liability). Plan ahead to avoid cash flow surprises!
Who Needs to Make Payment on Accounts?
Payments on account apply if:
- Your previous tax year’s income tax liability was over £1,000, and
- Less than 80% of your tax was deducted at source (e.g., via PAYE).
Most employees are exempt since PAYE covers their tax. Self-employed individuals, landlords, and those with untaxed income typically need to make these payments.
Capital Gains Tax (CGT) Deadlines
CGT is usually due as a lump sum by 31 January 2026 for 2024-25 gains. However:
- UK property sales: Pay within 60 days of completion.
- Non-residents: All UK property disposals require payment within 60 days.
Interest on Late Payments: 7% Rate
HMRC charges daily interest from the due date until payment. For example:
- A £5,000 balancing payment paid 30 days late incurs interest of:
£5,000 × 30/365 × 6.5% = £28.77.
Interest applies to late payments on account and balancing payments.
Penalties for Late Tax Payments
Missing deadlines triggers escalating penalties:
- 30 days late: 5% of unpaid tax.
- 5 months late: Additional 5%.
- 11 months late: Further 5%.
Example: A £4,000 tax bill paid 6 months late could cost £400 in penalties plus interest.
Note: Late payments on account don’t incur separate penalties, but unpaid amounts roll into your balancing payment, which does attract penalties if overdue.
Exceptions to the Rule
- Simple Assessments: Tax is due by 31 January 2026 unless HMRC issues the assessment after 31 October 2025, extending the deadline to 3 months post-assessment.
- Late Filing Notices: If HMRC sends your tax return request after 31 October 2025, your deadline shifts to 3 months from the notice date.
Plan Ahead to Avoid Pitfalls
- Diary reminders for 31 January and 31 July deadlines.
- Estimate liabilities early – especially if you’ve had a high-income year or sold assets.
- Budget for balancing payments and the next year’s first payment on account.
Need Help? Contact Fiscal Umbrella Limited
Tax rules can be complex, and mistakes are costly. At Fiscal Umbrella Limited, we specialize in:
- Calculating payments on account and balancing payments.
- Minimizing interest and penalties through proactive planning.
- Navigating CGT on property sales and investments.
Don’t risk penalties or sleepless nights – contact us today for personalized support tailored to your 2024-25 tax obligations.
HMRC Official Guidance on Payments on Account
🔗 https://www.gov.uk/understand-self-assessment-bill
Self-Assessment Tax Return Deadlines & Penalties
🔗 https://www.gov.uk/self-assessment-tax-returns/deadlines
Interest & Penalties for Late Tax Payments
🔗 https://www.gov.uk/penalties-for-late-tax-returns
Capital Gains Tax (CGT) Payment Deadlines
🔗 https://www.gov.uk/capital-gains-tax