Balancing payment due 31 January > £1,000

[Saj]

Hi - I've got a tax liabilility of £2000 on my BTL properties,I only got two properties also on PAYE. When doing my self assessment my accountant has told me that because its greater than £1000 I will also be required to make payments on account for the following tax year. These payments to account are automatically set at 50% of the previous year's liability. Is ths true ?

eg £2000 + £1000 for the following year total = £3000

[Saj]

HI
Does anyone know if the following applies to PAYE and if hold 2 BTL properites ?

Payments in respect of income tax (and Class 4 National Insurance Contributions) for a particular tax year are due at 31 January following the end of the tax year. Where the balancing payment due at 31 January is greater than £1,000 and the amount is greater than 20% of your total tax liability for that tax year (including any tax deducted at source) you will also be required to make payments on account for the following tax year. These payments to account are automatically set at 50% of the previous year's liability but can be reduced where you have reason to believe that your underpayment in the following tax year will be lower. If you reduce your payments to account too far interest will be charge on the difference between the actual amounts due and the amount paid. Such payments to account are due at 31 January and 31 July each year.

For example if your balancing payment for 2009/10 due at 31 January 2010 is £1,200 then you will also be expected to make a payment to account of £600 at that date in respect of your anticipated 2010/11 tax liability. This will be followed by a further payment to account of £600 due at 31 July 2010. Once your final 2009/10 tax liability has been ascertained any overpayment will either be refunded or set against your payment to account for the following tax year.

[Telometer]

Yes, it is true that payments on account for the following year are 50% of the prior year's liability.