This is money that you are required to pay twice a year in advance to cover the current financial year's tax bill. They are meant to help freelancers by spreading the tax burden.
Beware: You might get a bit of a shock in the first year, as you will have to settle the previous year’s bill plus 50% of your estimated current year’s bill by 31 January. The deadline for the other half is 31 July.
Thus, you have to make two payments, unless:
- Your last Self Assessment tax bill was less than £1,000
- You have already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings
