To ask the Chancellor of the Exchequer, what assessment he has made of the impact of paying tax in advance via HMRC's system of payments on account on (a) small business owners, (b) freelancers and (c) other self-employed people.
Answered on
4 March 2024
There has been no recent assessment of the impact of requiring payments on accounts (POAs) from self-employed workers.
POAs have been a feature of Self-Assessment since its introduction in 1996. They are legally due and, despite their name, are not payable before income has been earned. There are two equal payments on account six months apart. The first is payable on 31 January, ten months after the beginning of the tax year to which it relates. The second is payable on the following 31 July, four months after the tax year ends.
POAs create a flow of revenue to the Treasury to fund public services. They allow Self-Assessment taxpayers to spread the cost of their tax bill rather than paying in a single lump sum. They also limit any timing advantage gained by Self-Assessment taxpayers compared to other taxpayers, such as employees whose tax is deducted from their pay.
Self-Assessment taxpayers (including the self-employed) can make a claim to reduce or cancel their payments on account if they think they are excessive, or no longer due.