If you operate as a sole trader, partnership or just owe tax from your self assessment tax return calculation you normally pay a balancing payment by 31st January each year.
However, it is not usually as simple as this, especially if the amount of tax due, exceeds £1,000. In these circumstances, HMRC will ask you to pay two installments on account for a future year - one paid in January and the next paid in July. This means that the estimated liability for the tax year, is paid three months after the tax year end.
As an example, for the 5th April 2019 tax year lets assume the tax bill was £2,000.
|1||31st January 2020||Tax Liability to pay for April 2019 income:||£2,000|
|2||31st January 2020||1st payment on account for April 2020:||£1,000|
|3||31st July 2020||2nd payment on account for April 2020:||£1,000|
|4||31st January 2021||Balancing payment for April 2020||£X|
|5||31st January 2021||1st Payment on account for April 2021||£HalfX|
|6||31st July 2021||2nd payment on account for April 2021:||£HalfX|
HMRC will always estimate the tax for the next year based upon what tax was due for the previous year. Therefore, HMRC will always get tax upfront with a balancing payment made by you, three months after the year end.