Individuals who fill in a self-assessment tax returns and owe more than £1,000 in tax need to pay their latest instalment by 31 July
This affects tax which has not been collected in other ways, for example through an adjustment to a tax code, which needs to be paid via payment on account.
Payments on account are tax payments made twice a year by taxpayers to help them stay on top of their payments and spread the cost of the upcoming year’s tax.
Generally this applies to people who are self-employed or have other income from property – for most people who are employed, their tax is managed under PAYE.
Payment is spread over two instalments during the year and is calculated based on the previous year’s tax bill. Each payment is typically 50% of the last bill. A final payment is made after the actual tax return is submitted.
Kevin Sefton, CEO, untied, said: ‘The payment on account deadlines are 31 January and 31 July which means the second cut-off date is fast approaching.
‘In theory tax payment on account helps the self-employed spread out their bill. However, it can lead to more financial hardship for those who have been hit by the cost of living crisis and haven’t put the money way already.
‘We always advise individuals who have to pay these two sums every year to set money aside regularly in order to pay their liabilities at the beginning and midpoint of every calendar year.
‘If you are having difficulties paying your tax bill, don’t ignore it – contact HMRC as soon as you can, to see if they can set up a payment plan for you. It also makes sense to submit tax return information early, as this provides time for planning and identifying potential tax savings.’
A record 33,600 tax credit claimants have used the HMRC app to renew their tax credits claim so far this year, a 39% increase on last year, HMRC has revealed
The deadline to renew tax credits is 31 July and all claimants must renew their tax credits entitlement every year.
HMRC is encouraging more people to use the app as it is a quick and easy way to get this vital job done.
It is free and simple to use and allows direct access to tax credits at the touch of a button. There are many benefits of the fully secure app, which can be used on any smartphone or tablet, at any time, eliminating the need to call HMRC and saving time and money.
The HMRC app can be used to:
- renew their tax credits;
- make changes to their claim;
- check their tax credits payments schedule; and
- find out how much they have earned for the year.
There are nearly 259,000 tax credits app users, who have used the app more than 10 million times in the last year to do things like check their payment dates and amount.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Time is running out for our tax credits customers to renew their claims. It’s quick, easy and free to complete a renewal on the HMRC app – search ‘HMRC’ in your smartphone app store.’
The app can be downloaded at the App Store or Google Play. Online reviews at both indicate plenty of satisfaction with the app’s performance, as it currently holds a score of 4.5 stars on the App Store, and 4.7 on Google Play.
HMRC has released a video to explain how tax credits claimants can use the HMRC app to view, manage and update their details.
Once signed into the app after initial download, there are options for users to set up and select facial recognition, a fingerprint or a six-digit pin to get fast and fully secure access to their details.
The government has recently announced a cost of living payment of £650, payable in two separate lump sums of £326 and £324, for households receiving certain benefits or tax credits, to help with the cost of living. If receiving tax credits only, they are eligible for each payment.
HMRC will contact them and issue payments automatically, with the first being made by the autumn. It is not necessary to contact HMRC or apply for the payment.
Tax credits are ending and will be replaced by Universal Credit by the end of 2024. Many people who move from tax credits to Universal Credit could be financially better off and can use an independent benefits calculator to check, HMRC said. If people choose to apply sooner, it is important to get independent advice beforehand as they will not be able to go back to tax credits or any other benefits that Universal Credit replaces.
HMRC is warning people about scammers, saying that if someone contacts them saying that they are from HMRC and wants the customer to transfer money urgently or give personal information, they should never let themselves be rushed.
HMRC is also urging people never to share their HMRC login details. Someone using them could steal from the individual or make a fraudulent claim in their name. The department urges people to take their time and check HMRC’s advice about scams on gov.uk.
To sign into the HMRC tax credits service for the first time, people will need to prove their identity using two evidence sources. GB driving licences can now be used as a form of identity.
The director of a Manchester pizza takeaway who fraudulently claimed a £20,000 bounce back loan has been jailed for two years
Abdulrazag Zagroba, 54, from Manchester, appeared at Manchester Crown Court on Friday 24 June 2022 where he was sentenced to 24 months before Recorder Hudson.
This was the first successful criminal prosecution of a bounce bank loan fraudster for the Insolvency Service, which also saw Zagroba disqualified from acting as a director for seven years. Until now the only penalty for abuse of bounce back loans has been director bans.
The court heard that Zagroba was sole director of Amigo Pizza (Manchester) Ltd, incorporated in January 2020. The company operated a pizza takeaway business in the Stretford area of Manchester until it was dissolved in October the same year.
Zagroba’s application to dissolve the company was originally signed on 17 June 2020 but less than two weeks later, he applied for a bounce back loan of £20,000.
He did not disclose to the bank that the company was already in the process of being dissolved and he signed the loan declaration stating the company would be able to make repayments. By the time the loan was due to be repaid in June 2021, the company had already been dissolved.
The terms of the bounce back loan were clear that funds could only be used for business purposes and not personal use.
However, when interviewed under caution by Insolvency Service investigators, Zagroba admitted to having no intention of using the bounce back loan for the business.
Zagroba claimed that he arranged for friends to travel with around £14,000 in cash to give to his family abroad. He used the remaining £6,000 to buy a car and insurance.
He pleaded guilty to charges of fraudulently claiming Covid-19 financial support to which he was not entitled contrary to the Companies Act 2006 and the Fraud Act 2006 at Manchester City Magistrate’s Court on 9 May.
Julie Barnes, chief investigator at the Insolvency Service said: ‘Covid loans were designed to support viable businesses during the pandemic. Abdulrazag Zagroba, however, cynically sought to exploit the covid loan scheme and by dissolving his company, he intended to frustrate any attempt by the lender from taking action to recover the outstanding loan.
‘This sentence should serve as a warning to others who engaged in this behaviour, and they should come clean and repay the money before it is too late.’
One of the biggest problems for self employed taxpayers relates to confusion over allowable business expenses when completing self assessment returns
Many self-employed people experience difficulties completing self assessment returns due to ‘confusing terminology, ambiguity around allowable business expenses and uncertainty transferring figures from personal spreadsheets to HMRC’s system. These challenges resulted in a more time-consuming process and errors being made’, finds the latest HMRC commissioned research into the tax experiences of the self employed.
There was widespread consensus that the first year of self employment was by far the most challenging, with many emphasising the level of complexity and stress induced by the process of figuring out what they needed to do. This anxiety was further compounded by their fear of the potential financial repercussions of making a mistake.
The greater the number of roles and sources of income, the more taxpayers found it difficult to keep on top of their financial records, in turn impacting effective tax management.
The process of maintaining good financial records throughout the year was also challenging, presenting additional complications by increasing the difficulty of tax management.
For some self-employed customers managing cash flow was also a challenge. This difficulty was most prominent for those with irregular hybrid incomes as it was hard to predict and align the timings of their incomings and outgoings, exacerbated when combining PAYE and self-employed earnings.
Agents and accountants were mostly employed to help overcome tax management rather than financial management challenges; for example, to accurately complete self assessment returns.
Using a tax agent was also felt to provide the added benefit of saving time, particularly for those who were time-poor, and saving money, for example, by receiving guidance on the allowable expenses they could claim for.
The ‘payments on account’ process also made planning for tax payments more challenging. This stemmed from HMRC’s system of calculating tax bills based on taxpayers’ income from the previous year and ‘payment on account’ for the year ahead.
The process of planning tax payments based on this system was particularly challenging for those with irregular incomes that fluctuated significantly from year to year.
One respondent said: ‘Because my income can fluctuate, it can be quite frustrating to end up paying loads on account when you know for a fact that you’ve not earned as much. It makes it hard to plan around.’
Many self employed people experienced difficulties completing their self assessment ‘due to ambiguity around allowable business expenses, confusing terminology and uncertainty transferring figures from personal spreadsheets to HMRC’s system’. These challenges resulted in a more time-consuming process and errors being made.
Completing self assessment was seen as challenging across the range of tax and income complexity due to uncertainty around how to complete some parts of the forms. While it was said to have improved over time, the terminology within the return was still not felt to be intuitive and simple to understand due to the use of ‘jargon’ and acronyms.
As a result, some people found it difficult to understand the questions and to know which boxes to tick and where to input information. This issue was said to be compounded by the frequency of changes to the return, with these updates adding to their uncertainty each year and requiring time to process and understand.
Some also voiced frustration about the complexity of the ID number and process of retrieving this and inputting it into the Government Gateway. This was seen as a ‘convoluted system’ and was especially frustrating if the code was input incorrectly locking users out of the system.
Long-standing self-employed workers frequently stated that the tone in HMRC communications had generally improved and was more personable, which made completing the self assessment process less stressful.
Respondents suggested a number of ways for HMRC to improve their services, including helping them track their finances and plan for tax payment, for example, through real-time self assessment inputs, improving the speed and accuracy of completing returns, for example, through downloadable spreadsheets, and providing more personal and tailored support, for example, for those in their first year of self-employment.