Payment on Account
[noun] /ˈpeɪmənt ɒn əˈkaʊnt/
Definition
Paying your income tax in advance, as is mostly commonly required by the self-employed.
Glossary
Paying your income tax in advance, as is mostly commonly required by the self-employed.
Anyone in the UK who pays less than 80% of their income tax at source, and their tax bill is over £1,000, will be required to make payments on account.
Payment on Account is a way of paying your taxes in advance, twice a year, and if you're self-employed, it's likely you'll be required to do so.
Rather than basing your tax bill upon how much you've charged this year, Payment on Account is estimated upon your previous year's tax bill.
In your first year of trading, it's likely you'll be required to pay tax for the first year plus 50% of your estimated tax bill for the following year too.
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