Self-employed people, buy-to-let investors and anyone else who has to complete a self-assessment form to pay their tax could reduce the amount due on 31 July if their income fell in the 2012/13 tax year.
But it is important to contact HM Revenue & Customs in the next few days to let them know, using form SA 303.
If you simply make a smaller payment on 31 July, you will be liable for automatic penalty of 5% of the outstanding tax, with interest on that sum kicking in after 28 days' delay.
"Anyone paying tax on 31 January 2013 under self-assessment was effectively paying half of their tax bill for the 2012/13 tax year. HMRC expects the 31 July tax payment to represent the other half of the tax due for the 2012/13 tax year," explains Richard Mannion, national tax director at Smith & Williamson, the accountancy and investment management group.
"These payments are based on the income tax liability for 2011/12, so they will be excessive if the actual liability for 2012/13 is less."
He gives the example of someone with a holiday home who let it out and earned £4,000 in 2011/12. They would owe tax of £2,000 on 31 January and a further £2,000 due by 31 July 2013 as an estimate for the 2012/13 tax year.
Any variations in earnings from year to year are put straight through the tax return detailing actual earnings, which is submitted online by 31 January 2014.
"However, if your earnings were down on the previous year – and let's face it, lots of people have variable earnings – then you are entitled to apply for a reduction in your July tax payment using form SA 303. These reasons for the drop in earnings must be genuine and not simply that you have spent the cash," adds Mannion.
This article was written for our sister website Money Observer