Are you due money back from HMRC?
Your income tax is exactly that – a tax on your income, so, if you’re self-employed, have rental income, or receive dividends from a company you own or invest in, your personal tax is calculated on all of that.
However, when your tax bill passes £1,000 in a tax year, and less than 80% of your tax is taken through PAYE, you’ll also be required to pay an additional amount – known as payments on account. This is calculated by HMRC, and you’ll pay part of this on 31st January and another amount on 31st July.
Effectively, HMRC are predicting what you’ll owe them in the following year and getting their money up front!
That means they’re looking into their crystal ball and deciding what you’re likely to earn in the next 12 months. For example for 2023/24, the tax liability would form the basis of the payments on account for 2024/25.
Does HMRC owe you money?
If you know your income for 2024/25 is lower than it was for 2023/24 your tax liability for 2024/25 will most likely be lower than 2023/24.
If you’ve made payments on account in January and July 2025, but your earnings mean you won’t owe as much as they calculated you can ask for a refund.
To get that, you need to have completed your personal tax return for the last tax year (to 5th April 2025). With Christmas coming up that cash could be welcome, meaning you don’t give your credit card as big a workout.
That means you need to get a move on and give your accountant your tax return information as soon as possible, so if you are due a tax refund you can have this for Christmas.
Don’t wait until January, get your return sorted out this side of Christmas.
If you need any assistance with finding out if HMRC might owe you money, then feel free to get in touch with out expert team today and we’ll be more than happy to help!
