Tax Payment Question

Mumphali

My husband has his self assessment to pay for the year 2005/2006, however they want half of that as payment on account for 2006/2007.
I spoke to the tax office and said that we have not yet done the assessment for y/e 07 and so we are not ready to pay that sum.

they told me that we wcan reduce the amount but if it turns out to be more we would have to pay interest on the amount.

Is there a way for us to pay just for 05/06 without incurring interest or further charges - it annoys me that the govt are bleeding our account dry and not allowing us to earn interest on our earnings.

Please help - much appreciated.
Mxx

Snookboi

Unfotunately not, the payment on account (POA) needs to be made.

If you cancel the POA and the tax subsequently becomes due next year, your husband will be liable to interest and surcharges from the date the reduced POAs were due. Dpending on how much is owed this can add up significantly.

One option for next year though, if your husband is employed, and can submit his return by the end of September, then if he asks for any liability to be collected through his PAYE code HMRC will not ask for payments on account.

Sorry it couldn't be better news.

RayWolfe

It has been that way for a very long time. They are not bleeding you dry, just putting onto a similar footing to most of us who are on PAYE.

silvercar

Watching this thread with interest ('scuse the pun) as I am likely to be in the same situation.

When do you have to pay the 06/07 first instalment?

Mumphali

January 07

We just haven't saved that ampunt of money as we've had a baby in the last year (1st one) and moved house. I return to work in April so we'll be able to pool together to pay it later - it's a bit off because hubby's earnings in the first 6 months of the year were hardly anything - could i contact Tax office with an account of his earnings for that period even if 2nd period is more?

Tallymanjohn

Their argument is that if, for example, you started as SE in May '06, you wouldn't have to pay any tax until Jan '08 - even if you started in Mar '07 you'd still have 9 months of non tax-payment so they are just trying to even out the payments otherwise you're always paying a year or so in arrears. When you set up as SE you should have been advised of the POA system as it's been in existence for some time now &, in all honesty, you should have been told to put away 20-odd % to cover your tax bill - it's one thing you cannot easily avoid I'm afraid & the taxman doesn't take excuses lightly.

busiscoming2

Hi Can anyone tell me how this business affects us. My husband went SE in January 06, did the self asses online months ago, what happens about payment - do they send a letter and add some for the POA? We havent heard a thing from them!

Hoddie_2

You can claim to reduce the Payments on Account (POA) if your liability for 06/07 is (or will be) less than the liability for 05/06. You'd need to calculate the different and then ask HMRC to reduce each POA to half of the new figure. You may also be able to arrange a payment plan by contacting the Accounts Office - if you talk to them before the due date they should be more willing to listen. It's in their interests not to have to chase you.

clear_blu

busiscoming2 wrote:

Hi Can anyone tell me how this business affects us. My husband went SE in January 06, did the self asses online months ago, what happens about payment - do they send a letter and add some for the POA? We havent heard a thing from them!

I assume he has a record of the amount of tax he is due to pay, the Tax people should send him notice early in January (or before) to say they agree the amount, it must be paid in full before 31st January 2007. If you dont hear by the second week of January then I would pay the amount as calculated by him or he will get fined £100 for late payment. If the amount of tax due is less than £500 he will not be bound to pay a POA, if it is more than that then he will have to pay 50% of the amount towards 2007 tax bill in addition to the normal tax payment for 2006.........these all have to be paid by 31st January.

Petmidget

clear_blu wrote:

or he will get fined £100 for late payment.

That isnt correct, the £100 is for late filing of the return not payment. Their will be interest on any unpaid amount.

Any payments on account paid more than 1 month late carry a 5% surcharge.

malcindebt

Snookboi wrote:

One option for next year though, if your husband is employed, and can submit his return by the end of September,
Sorry it couldn't be better news.

From April 2007 there will be no choice but to return tax returns before Sept 30th, as from April 2007 the filing dates are being changed.

September 30th for returns subitted by paper, and November 30th for online filed returns.