Self Assessment (payment on account)

surfer9

Hi,

My question relates to the 2016-17 tax year....

I have paid the Payment on Account for this tax year in January. I have another payment on account due by end of July.

I have just calculated my profits for the year, which have dropped from the previous year. The payments on account are therefore too high....

If I file my tax return now - would the payment on account that I owe then adjust according to the profits I input? Would it then automatically reduce?

I usually don't bother doing my accounts until January, but I'll get them out of the way now if it reduces my payment on account so I don't have to overpay.

Thanks.

Spidernick

Your 16/17 liability will be reduced by the January POA made. If the balance after accounting for this is then less than the July POA due, all you will have to pay in July will be the balance. If the remaining balance is more than the July POA you would then need to pay the full July POA and then the remaining balance in January 2018 (along with your first POA for 17/18).

Dazed_and_confused

Yes although my understanding of the mechanics is,

2016/17 POA say £1500 each so £3000 in total with the July POA included

31/01/2017 POA of £1500 has been paid

2016/17 self assessment liability is actually £2500

31/01/2017 POA is amended to £1250 - this has already been paid in full

31/07/2017 POA is amended to £1250 - £250 credit from the 31/01/2017 POA is credited to the 31/07/2017 POA and you have £1000 left to pay at the end of July (less any interest you might be due for having more than it turns out was necessary on 31/01/2017)

Spidernick

I don't think that is correct, as the 16/17 payments on account are based on the final 15/16 liability and are not then adjusted unless a claim to reduce these is made. The final 16/17 liability has no bearing on the POAs for that year, as I understand it, but I am happy to be shown to be wrong.

Using your example it's £2,500 less the £1,500 January POA (unchanged), so £1,000 payable in July to clear 16/17 (which is the same as your example, but the mechanics are different).

[Deleted User]

Spidernick wrote: »

I don't think that is correct, as the 16/17 payments on account are based on the final 15/16 liability and are not then adjusted unless a claim to reduce these is made. The final 16/17 liability has no bearing on the POAs for that year, as I understand it, but I am happy to be shown to be wrong.

Using your example it's £2,500 less the £1,500 January POA (unchanged), so £1,000 payable in July to clear 16/17 (which is the same as your example, but the mechanics are different).

Unfortunately Dazed is correct:
The statement will show:
Payment on account January 2017 £1500
less adjustment from 2016/17 return £250
Balance £1250

Similar for July.

Interest supplement will be calculated on £250 from 31st January 2017 (or when paid) to the date of adjustment. If the method that you suggest was employed no interest would be calculable.

Dazed_and_confused

spidernick

You are correct to say the 2016:17 POA are based on the 2015:16 liability but that is only until the 2016:17 return is submitted, the actual 2016:17 figures (where lower) trump the original POA.

One thing I should have mentioned is that if the actual 2016:17 liability is less than £1000 then the 2016:17 POA are still required (say £400 each time) but 2017:18 POA won't ever be applicable because the need for those is established from the 2016:17 liability.

If the 2017:18 liability went back up to £3000 then that would be payable as a balancing payment (but 2018:19 POA would normally then apply)