Finance Matters Insights
The 31st July Tax Deadline: What You Need To Know
Happy Monday,
The 31st July tax deadline is quickly approaching and it's one that thousands miss every year. If you're self-employed, you'll want to understand if it applies to you and how it works.
❓Who it applies to
Most people who earn a salary have their income tax collected automatically through PAYE. Your employer deducts it before your salary hits your bank account and pays it to HMRC on your behalf. You never really have to think about it.
If you have income that isn't taxed automatically, you have to declare it yourself through Self Assessment. That includes:
→ Sole traders and freelancers, whose income doesn't come pre-taxed
→ Landlords earning rental income
→ Company directors taking dividends
→ Anyone with significant income from investments, crypto gains, or side hustles
→ Landlords earning rental income
→ Company directors taking dividends
→ Anyone with significant income from investments, crypto gains, or side hustles
If you're one of those people and your last tax bill came to more than £1,000, HMRC also asks you to make two advance payments during the year. These are called "payments on account" and the second one is due on 31 July.
If you're not sure whether it applies to you, log into your HMRC account, it'll be there.
🗒 Payments on account
To clarify, you're not paying any more tax than you'd be required to pay. You're just paying earlier.
The idea is that HMRC are able to collect tax earlier in the tax year rather than at the end. For you, it also means instead of saving towards a tax bill at the end of the tax year, you'll split those payments into two and pay more on an ongoing basis.
When you proceed to file your actual return, should the estimated tax bill differ from the actual tax due, they either refund the difference or ask for the top-up.
📌 What you actually owe
Each payment on account is 50% of your previous year's tax bill.
So say your 2024/25 tax bill came to £6,000. HMRC assumes your 2025/26 bill will be roughly the same, so they ask you to pay £3,000 in January 2026 and £3,000 in July 2026.
If you're self-employed, this includes your Class 4 National Insurance too. It doesn't include Capital Gains Tax or Class 2 NI, both of those are settled in January only.
You can check your exact figure by logging into your HMRC account. It'll be sitting there under your Self Assessment statement.
💸 What happens if you earned less?
For anyone who has had a quieter year than anticipated, you can ask HMRC to reduce your payment on account.
You can do it either through your online HMRC account or by submitting a form called SA303. You've got right up until the deadline to do it.
One thing to be careful of: if you reduce it too far and it turns out you actually owed more, HMRC will charge you interest on the difference when you file your return. The current interest rate is 7.75%, so a realistic estimate is far better than a hopeful one.
So, if you're not sure whether it applies to you, it's worth having a chat with your accountant and/or logging into your HMRC account to check.
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Fisayo Martins
Founder at Finance Matters UK
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