If you have income that isn’t taxed at source, such as self-employed profits, dividends or rental income, January can mean a sizeable tax bill.
The deadline for paying your Self-Assessment tax is 31st January, and for some people this can also include a payment on account towards the following year’s tax bill.
Don’t wait until January
Leaving everything until January means you may not know how much you owe until very close to the payment deadline.
Getting your tax return completed earlier means you can find out what your tax bill is likely to be in advance, giving you time to budget for it and deal with any queries or missing information.
Payments on account
Payments on account are advance payments towards your following year’s tax bill and, where they apply, are normally due in two instalments 31st January and 31st July.
This can catch people out, as your January payment may be more than just the tax due for the year that has finished.
If your circumstances have changed and you expect your income to be significantly lower, there may be an option to reduce your payments on account. This is something we can look at when preparing your tax return.
Put some money aside
If you receive income that isn’t taxed at source, getting into the habit of putting some money aside for your tax bill can make a big difference.
It can be tempting to look at the balance in your bank account as money you have available to spend, but some of it may ultimately be going to HMRC.
You don’t need to know exactly what your tax bill will be. Regularly putting money aside throughout the year can simply make the eventual payment much easier to manage.
Your tax bill can change
It is easy to assume your tax bill will be roughly the same as last year, but your circumstances may have changed. You may have:
Increased or decreased your business profits, received more or fewer dividends, started or stopped renting out a property, started a new source of income, made pension contributions, sold an asset or made a capital gain.
All of these can affect your tax position.
Getting your information to us early allows us to look at everything properly and gives you a much clearer picture of what you will need to pay.
A little planning can go a long way
You don’t need to wait until January to find out what your tax bill is going to be.
If you haven’t already sent us your information for your 2025/26 tax return, now is a good time to get it together. The earlier we have everything we need, the earlier we can complete your return and let you know what is due.
There are still around four months until the January deadline, but it’s worth getting organised now rather than finding yourself trying to sort everything out at the last minute.
