Ways to pay your January tax bill

ways-to-pay-tax-bill

As a contractor, you may or may not have tax to pay by 31 January. Do you know the ways to pay your tax? Make sure you know the best way to pay your tax bill so you don’t miss the deadline and incur any charges or interest.

Many contractors manage their limited company by taking the maximum dividends beneath the threshold for tax and the maximum salary to absorb the personal allowance. This mix often leaves contractors with no tax to pay come the usual 31 January deadline. However, profits from land and property, capital gains and income from other sources are a few other reasons why tax could be due.

Deadlines and penalties

The 31 January is the deadline to pay your self-assessment tax liabilities. Self-assessment is the summary of all your personal income. This could be from:

Untaxed employment income
Dividends above the tax threshold
Land & Property, such a rental profits
Capital Gains, for example, on the sale of a rental property
All other untaxed income

It is also the deadline to pay your first “payment on account”, should this be relevant.

Failure to pay can result in penalties and charges as well as interest on the taxable sum. It is therefore always advisable to make the payment of tax due, in full, by the deadline, to avoid further costs.

If payment by the deadline isn’t possible, speak to your accountant or to HMRC to discuss the next steps.