Don't forget the 31 July tax deadline

If you forget or can't make a payment by the deadline you face interest charges. But you won't get wacked with exorbitant penalties.

Accountants say you should inform the Revenue if you're struggling, to ensure you're not hounded for payment.

The payment due is the second 'payment on account' for the 2008-09 tax year.

How the charge is calculated

Those who filed a 2007-08 tax return would have had to return it, and pay any outstanding tax for that year, by 31 January this year.

But most would also have been asked to make an additional two payments towards their 2008-09 bill, each known as a 'payment on account'.

The first installment was due on 31 January and the second is due by the end of this month.

Each payment is half of your previous tax year's bill. So if you paid £10,000 tax in 2007-08 you'd have owed £5,000 on 31 January and the same amount by 31 July.

If you don't/can't pay

If you miss the July deadline you’ll pay interest on the outstanding balance at a 2.5% annual rate until paid, but no more, as long as the final bill is settled by 31 January next year.

Importantly, if you can't pay, let the Revenue know before the end of the month to avoid it chasing you.

Tony Tesciuba, from accountancy firm Tesciuba Limited, says: "Paying last year's taxes out of this year's income is going to be hard for many at the moment. Taxpayers worried about making the 31 July payment should contact HMRC on 0845 302 1435 straightaway.

"Don’t wait until the payment is overdue. Feedback about this service has been very positive."

Only those whose previous year's tax bill was more than £500 have to make payments on account, unless more than 80% of the previous year's liability was deducted by an employer.

In addition, you can choose to lower your payment on account if you earned less in 2008-09 than in 2007-08. However, if after filing your 2008-09 return, you still owe money, you'll face interest charges on the difference.

Further reading/Key links

Full tax breakdown: 2009/10 rates