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 instalments 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, let's 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.