paying payment on account

wallofbeans

Hello,

I've just done my tax return for 2015-16. This is new to me as I usually do it in January. It is also new to be making some money so paying tax is unpleasant.

I have a 'payment on account' due at the end of July, and my question is - should I wait until a few days before to pay it, or pay it now and get it out of the way? I'm thinking I should hold onto the money for as long as possible but I wonder if there are other ways of thinking about this...

Thanks.

spadoosh

wallofbeans wrote: »

Hello,

I've just done my tax return for 2015-16. This is new to me as I usually do it in January. It is also new to be making some money so paying tax is unpleasant.

I have a 'payment on account' due at the end of July, and my question is - should I wait until a few days before to pay it, or pay it now and get it out of the way? I'm thinking I should hold onto the money for as long as possible but I wonder if there are other ways of thinking about this...

Thanks.

The bold bit always confuses me, earning money and paying tax is normally better than not earning money and not paying tax?! :cool:

Upto you. You can earn interest obviously on anything you have in an interest bearing account but its worth making sure you wont spend it.

Pros of keeping it, earns you some interest. Con, not many. Pro of paying it, its done, con, dont earn as much interest. Your choice.

wallofbeans

spadoosh wrote: »

The bold bit always confuses me, earning money and paying tax is normally better than not earning money and not paying tax?! :cool:

Upto you. You can earn interest obviously on anything you have in an interest bearing account but its worth making sure you wont spend it.

Pros of keeping it, earns you some interest. Con, not many. Pro of paying it, its done, con, dont earn as much interest. Your choice.

Yes, but I forget about the tax bit. And it's only later I realise I didn't earn as much as I thought!

I'll keep hold of it then. It's not being spent. I'll just have to set myself reminders to pay it towards the end of July.

DJR1971

You could pay it early and HMRC give you interest at 0.5% which isn't great but also gets it out of the way.

Google HMRC early payment interest for the details.

HappyMJ

wallofbeans wrote: »

Hello,

I've just done my tax return for 2015-16. This is new to me as I usually do it in January. It is also new to be making some money so paying tax is unpleasant.

I have a 'payment on account' due at the end of July, and my question is - should I wait until a few days before to pay it, or pay it now and get it out of the way? I'm thinking I should hold onto the money for as long as possible but I wonder if there are other ways of thinking about this...

Thanks.

If you've got the money then you may as well pay it now.

If you can use the money by putting in an offset account and reducing the amount of interest you pay on a mortgage or loan then wait until the last minute. You can set the date on a standing order to pay it on the due date.

polymaff

DJR1971 wrote: »

You could pay it early and HMRC give you interest at 0.5% which isn't great but also gets it out of the way.

Only if it turns out to have been an over-estimate - and on the over-estimated portion from the due date to the date of repayment, only - I believe.

Better in the bank with a reminder / preset payment

polymaff

wallofbeans wrote: »

...It is also new to be making some money so paying tax is unpleasant.

I have a 'payment on account' due at the end of July

So how have you racked up a PoA without making any money? :T

wallofbeans

polymaff wrote: »

So how have you racked up a PoA without making any money? :T

I started making money last year. I'm not used to it yet.

polymaff

wallofbeans wrote: »

I started making money last year. I'm not used to it yet.

Respect - getting into PoA on your first go! :rotfl:

wallofbeans

polymaff wrote: »

Respect - getting into PoA on your first go! :rotfl:

There was a lot of cursing before I got used to the idea.

DJR1971

polymaff wrote: »

Only if it turns out to have been an over-estimate - and on the over-estimated portion from the due date to the date of repayment, only - I believe.

Nope, if you pay it early then interest will accrue. I've seen it on many occasions and have done so in the past myself. It is however a personal choice, some do and others don't.