If you can answer yes to any of the following questions, then you may well be able to reduce your upcoming payment on account.
If you are self employed (without a limited company), during your last financial year:
- Have you noticed that sales have dropped?
- Did you invest in new equipment?
- Did your stock levels increase noticeably?
- Did you incur significant additional costs e.g. rebranding/new website/repairs?
If you are a company director, in year ended 5th April 2018:
- Did your dividends drop for any reason?
- Did you increase your pension contributions?
- Did you make any significant gift aid donations?
Answering yes, to any of the above questions may mean that your taxable income has dropped. If this is the case, you are entitled to apply for your payments on account to be reduced.
Taking advantage of this opportunity, means that you can benefit from your lower tax bill now.
You don’t need to wait for 31st January 2019 to receive a tax refund, as you’ve overpaid due to your payments on account being too high. I’m sure you would benefit from having these funds sooner rather than later. Remember your default payments on account are only an estimate of tax due, as they each equate to 50% of your prior year tax bill. It is therefore in your interests to consider whether you can justifiably reduce your payments on account.
Also just to put your mind at rest, if having considered your taxable income you believe that your tax bill will actually be higher this year, your current payments on account won’t increase! You will simply pay any balance due on 31st January 2019.