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Payment on Account

[ˈpeɪmənt ɒn əˈkaʊnt]



‍Payment on Account is a payment system which requires self-employed individuals to make advance tax payments based upon their previous tax bill.

More detail:

Payment on Account is a tax payment system where taxpayers can make advance payments towards their tax bill.

The system is based upon the tax bill from the previous year and requires taxpayers to make payments equal to half of the previous year's tax bill. It is possible to appeal if the individuals expect their tax bill to be lower.

This system applies to individuals who earn more than 20% of their income outside of employment. People who qualify pay two Payments on Account every year. It is possible to contact HMRC and work out a solution if an individual thinks they cannot afford to pay. This may mean interest payments though.

This system exists to reduce tax evasion and make sure individuals continue to pay their tax.

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