An individual's income tax liability for 2025/26 (after tax deducted at source) was £8,400. For 2026/27 it is £9,000. What payments are due, assuming payments on account are required?
Answer and explanation
Correct answer: D. Payments on account of £4,200 on 31 January 2027 and 31 July 2027, and a balancing payment of £600 on 31 January 2028
- Step 1: Each payment on account is 50% of the previous year's liability: £8,400 / 2 = £4,200.
- Step 2: They are due on 31 January in the tax year and 31 July after it.
- Step 3: The balancing payment is £9,000 - £8,400 = £600, due on 31 January 2028.
Answer
Payments on account of £4,200 on 31 January 2027 and 31 July 2027, and a balancing payment of £600 on 31 January 2028.
Why not the others: £4,500 is based on the current year's liability and the payments are based on the prior year. Payments on account are required, not just one payment. The liability for 2026/27 is higher than the payments on account, so more is due and no refund arises.
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