The 31 July Tax Deadline: What It Is and Do You Need to Pay?

If you’re self-employed or file a self-assessment tax return, you may have a payment due on 31 July.

I get a lot of questions about this one, because it catches people out more than the January deadline does.

What is it?

If your tax bill was over £1,000 last year, HMRC usually asks you to make advance payments towards your next tax bill, called Payments on Account.

There are two: one due 31 January, and a second due 31 July. Each one is normally half of your previous year’s tax bill.

Do you need to pay it?

Not everyone does. You won’t owe a Payment on Account if your last tax bill was under £1,000, if more than 80% of your tax was already collected at source, or if you’ve already told HMRC your income has dropped and reduced your payments accordingly.

What if your income has gone down this year?

If you know this year’s profit will be lower than last year’s, you can apply to reduce your Payment on Account rather than paying the full amount and waiting for a refund later. This is worth checking every year if your income varies.

What happens if you miss it?

HMRC charges interest on late payments from the day after the deadline, currently calculated daily. It adds up quickly, so if you’re not sure whether you owe anything, it’s worth checking rather than guessing.

Not sure where you stand?

If you’re unsure whether you have a payment due, what it should be, or whether you can reduce it, get in touch and I’ll take a look for you before the deadline.

Contact me

How to Set Up a Business: A Guide for Sole Traders and Partnerships

Starting a business is a rewarding journey, but it comes with responsibilities. Whether you’re planning to operate as a sole trader or in a partnership, here’s a clear guide to help you navigate the process.

1. Decide on Your Business Structure

The first step is to choose between being a sole trader or forming a partnership:

  • Sole Trader: You’re the sole owner, responsible for profits and liabilities.
  • Partnership: Shares responsibilities, profits, and risks among two or more individuals.

Both options have pros and cons—choose what aligns best with your goals.

2. Register Your Business

You must register with HMRC. Here’s how:

  • Sole traders: Register online.
  • Partnerships: All partners must register individually, and a nominated partner registers the partnership.
    🕒 Deadline: October 5th of the second tax year.

Pick a business name that represents your brand and complies with naming rules.

3. Understand Your Financial Obligations

Good financial management is crucial.

  • Keep accurate accounting records to avoid penalties (up to £3,000).
  • Decide on an accounting method: Accruals or cash basis.
  • Submit your tax return by January 31st after the end of the tax year.
  • Prepare for tax payments, including Payments on Account (POAs) if required.

4. VAT Registration

If your turnover exceeds £85,000, VAT registration is mandatory.
Benefits of voluntary registration:

  • Recover VAT on expenses.
  • Avoid penalties for late registration.

However, VAT registration also means submitting VAT returns and charging VAT on sales.

5. Using Your Home for Business

If you work from home, claim a portion of your expenses as business costs.

  • Use actual usage or fixed deductions.
  • Consider the potential impact on tax relief for your property.

6. Additional Considerations

Explore VAT schemes like the flat-rate scheme or cash accounting scheme to simplify processes. If you hire staff, be prepared for payroll and pension responsibilities.

Conclusion
Starting a business can feel overwhelming, but by taking it step by step, you’ll build a solid foundation for success. Follow these guidelines, stay compliant, and focus on growing your business.

For more tips and insights, stay tuned or reach out for personalized advice. 🚀