If the tax due from your 2018/19 tax return was more than £1,000 then HMRC will be expecting you to make payments on account for the following year. On the assumption that your income will be steady, payments on account will be based on your 2018/19 tax bill. 50% of that amount will have been due on 31st January 2020, with another 50% due on 31st July 2020. These payments will be offset against the amount calculated to be due on your 2019/20 tax return, with a balance or refund due depending on the final calculation. 

If you know your income has fallen in the current tax year, you can apply to reduce these payments on account. The first opportunity to do this was on the tax return itself. If you have a personal tax account then you can update your payments on account from there. Simply sign on to your account, select your latest tax return and use the option “Reduce payments on account”. If you have an agent they should be able to make this application on your behalf. If neither of these options are available to you, you can apply by post instead. The form to make this application and details of where to send it can be found here. tinyurl.com/POAReduction 

You should be careful not to overestimate the reduction in your income. If your reduced payments on account are insufficient to cover your tax bill then interest will be due on the shortfall, capped at the original value for your payments on account. 

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