Self employed January tax payment

Alexis27

I've had my self employed tax demand for January. I know there is a 5% penalty for paying the 'balancing payment' 30 days late, but the HMRC website states "The penalties above do not apply to any payments on account that you pay late".

I assume you pay interest on any 'on account' late payment?

What is the disadvantage of paying the 'balancing payment' in full by 31st Jan, but paying the 'on account' sum a month later, for example?

Mikeyorks

You get charged 3% interest. And it's unlikely you're getting that net if you have the money available?

Alexis27

I'm about £400 short, so I could pay that by the end of February and have to pay just an extra £12?

Mikeyorks

No.

The 5% surcharge at the end of Feb is charged on the sum outstanding. So if the £400 was a balancing payment then the surcharge would be £20

But the 3% is straightforward interest. So - for a month that would be £400 x 3% / 12 = £1.

Which is cheaper than borrowing it?