What is Self Assessment?
Self Assessment is a way in which HMRC assess all of your income.
Self Assessment or Tax return as it is referred to simply lists all the income which an individual has received in the tax year. A tax year runs from 6th April to 5th April.
A self assessment will simply help HMRC calculate if there is any tax owed back to an individual or owed to HMRC.
With the recent announcements it seems like the self assessment tax return as we know it will be no more. Plans are to incorporate the tax return into a system which updates each month, as opposed to the one off submission. This is good news for individuals as it means there will be no deadline, unlike the 31st January one which is currently in place.
What are payments on account?
Payments on account are payments towards your next year’s income tax. The amount you have to pay for each payment on account is half of your previous year’s tax bill. So if your tax bill for 2013/14 was £1,500 (you only have to make payments on account if your tax bill is over £1,000), then each payment on account would be £750 (payable on 31st January and 31st July). These payments will then be deducted from your tax liability and a balancing charge or refund will be due.