Start thinking now about your January 2025 tax payment

With autumn cultivations well under way it won’t come as a surprise if farmers are not thinking about their tax payments right now. It may be worth a thought, however, as there could be the potential to reduce your payments on account (POA) for 2024/25 (payable in January and July 2025).

Yields from the 2024 harvest generally appear down on 2023 and grain prices have dropped, indicating that profits may be lower in the year to 5 April 2025.

POA for 2024/25 are automatically based on the 2023/24 tax liability, with the standard assumption that the tax for 2024/25 will be the same as the previous year. Anyone who thinks that their taxable income will be lower in the year ended 5 April 2025 can make a claim to reduce their POA.

Basis period reform

Any unincorporated business that draws up their annual accounts to a date different to 31 March or 5 April will be affected by HMRC’s basis period reform. These businesses will see more than twelve months profits being taxed in 2023/24 as everything is brought up to date in readiness for the new tax year basis which started on 6 April 2024. With additional profits taxed in 2023/24, this could have a significant impact on the January 2025 tax payment.

If basis period reform affects your business, and you are not aware how this will impact you, then speak to your accountant as soon as possible.

What to do if you are struggling to pay your tax bill

Taxpayers who think they will struggle to make their January tax payment are advised to contact HMRC and set up a payment plan to spread the cost. This option is available to taxpayers who:

• have filed their latest Tax Return
• owe £30,000 or less
• are within 60 days of the payment deadline
• do not have any other payment plans or debts with HMRC

Payment plans need to be set up by the taxpayer themselves and can be done either online through their digital tax account or by phoning the HMRC self-assessment payment helpline on 0300 200 3820.