Payment on Account Query

Aiadi

Hi,

I have just finished my tax return and been told the payment on account (£3000 x 2) for 11/12. I expect my earnings to be more in 11/12 and expect the £6000 tax won't be enough so I'll end up paying the remainder after the next tax return.
Question: Will I pay interest on the difference? Can I increase the payment on account? The reason I ask is that a couple of years ago I reduced my payment on account expecting my income to be lower and ended up not paying enough resulting in interest applied. Keen to avoid paying any interest.

I have spoken to HMRC just now and the chap went away to check, came back and wasn't sounding very sure.:cool: He said I can't increase the payment on account and not to worry as I wouldn't have to pay any interest if it didn't cover it. Is this correct?

Many Thanks

BoGoF

No, if your actual 11/12 actual liability is more than the POA's generated from your 10/11 liability it will be due as a balancing payment on 31/1/13.

Mikeyorks

You can increase the POAs effectively by simply overpaying. But not sensible to do so - simply put the excess into a savings account until Jan 13. No interest charged on the shortfall - it simply gets added as the balancing payment due Jan 13.

But no interest added on the overpayment - so keep it!

Aiadi

So have I got this right that I won't be charged any interest in the balancing payment? Thanks,

BoGoF

Aiadi wrote: »

So have I got this right that I won't be charged any interest in the balancing payment? Thanks,

Only if you pay it after 31/1/13.

Aiadi

Thanks for editing your post Mike and thanks all for the help. Will keep the money in a savings account then!