Self Assessment Question

tigerspill

Hi,
I am not sure if I am posting on the right area, but it seemed the closest to my question.

I am in the process of completing my Self Assessment and owe around £2000. This is primarily for two reasons -
1. I paid too much into my pension and broke the annual allowance.
2. Rental income.

I have no dispute about this and will pay it when I submit the form.

However, It also shows -
Plus
First payment on account for 2017-18 - £1000
Second payment on account for 2017-18 will be due by 31 July 2018 - £1000

So it looks like it is assuming that my tax bill for 17/18 will be the same as 16/17 and it wants half of that paid immediately in January and the remainder before July.
Now I dont expect to have anywhere near this size of tax bill in 17/18 as the vast majority is because of the pension over payment which I won't be doing in 17/18.

Not sure what is going on. Do I have to pay this? If I do have to pay and it is a huge over payment, how would I get it back?

Sorry for the questions - but this is a lot of money so am some what concerned.

Any help appreciated.

Thanks

chrismac1

No, you can log in and reduce this to zero. My standard note to all clients, as an accountant, on this is:

Many aspects of the UK tax system are in my view bonkers, the most obvious one being the end date of 5 April. This is because of a decree made in 1582 by Pope Gregory 13, how daft is that? These stupid aspects which have not been changed are why it is the longest tax code in Europe. Self-assessment payments on account are another. They apply if the annual bill is above £1,000. On 31 January 2018 you will not only have to pay all of 2016-17 tax due, but 50% on account of 2017-18.

gt94sss2

Have a read of https://www.gov.uk/understand-self-assessment-bill/payments-on-account

If you think your income/tax bill will be less this year, you can apply for the payments on account to be reduced.

EdSwippet

tigerspill wrote: »

I am in the process of completing my Self Assessment and owe around £2000. This is primarily for two reasons - 1. I paid too much into my pension and broke the annual allowance. ...

It sounds somewhat unlikely that you could benefit from this, but perhaps worth mentioning 'scheme pays' here:

.... if the annual allowance charge is more than £2,000, you can ask your pension scheme to pay the charge from your benefits.

tigerspill

chrismac1 wrote: »

No, you can log in and reduce this to zero. My standard note to all clients, as an accountant, on this is:

Many aspects of the UK tax system are in my view bonkers, the most obvious one being the end date of 5 April. This is because of a decree made in 1582 by Pope Gregory 13, how daft is that? These stupid aspects which have not been changed are why it is the longest tax code in Europe. Self-assessment payments on account are another. They apply if the annual bill is above £1,000. On 31 January 2018 you will not only have to pay all of 2016-17 tax due, but 50% on account of 2017-18.

Thanks for this. Do you apply for the reduction before or after submitting the SA? And is it approved immediately or is there a waiting time?

silvercar

tigerspill wrote: »

Thanks for this. Do you apply for the reduction before or after submitting the SA? And is it approved immediately or is there a waiting time?

From memory, you do this at the same time as submitting (or later).

It works on the basis that you self declare that you will have less tax to pay in the next financial year and therefore you should pay less tax in advance. There is no approval or waiting time, you pay less and hmrc reserve the right to charge interest if you have paid too little advance tax.

badmemory

silvercar wrote: »

hmrc reserve the right to charge interest if you have paid too little advance tax.

And don't forget they charge more than you can get on any interest bearing account so it is not wise to try to be clever!

Dazed_and_confused

tigerspill

Think you've probably understood this but remember the requirement to pay payments on account for 2017:18 will always be based on your 2016:17 tax return, even if the tax due for 2017:18 is less than £1000.

So if the 2017:18 tax is only £500 each poa for 2017:18 would be £250 but the poa cycle would then stop and they would not apply for 2018:19.

NB. If your bill was bigger in 2017:18 the poa would remain £1000 each (using your example) with the balance being payable in January 2019.

The trick is to not over reduce them, try and guesstimate what you will have to pay for 2017:18, split that in two and reduce each poa to that figure. That minimises the risk of interest being charged.

If you end up paying more than was actually due you would be refunded after you have sent in your 2017:18 return.

TheCyclingProgrammer

silvercar wrote: »

From memory, you do this at the same time as submitting (or later).

It works on the basis that you self declare that you will have less tax to pay in the next financial year and therefore you should pay less tax in advance. There is no approval or waiting time, you pay less and hmrc reserve the right to charge interest if you have paid too little advance tax.

I know its been said on here enough times, but payments in account are not "advance tax". They are estimated payments on account of the current tax year and the first one is due 10 months into the tax year and the second 4 months after it finishes.

badmemory

TheCyclingProgrammer wrote: »

I know its been said on here enough times, but payments in account are not "advance tax". They are estimated payments on account of the current tax year and the first one is due 10 months into the tax year and the second 4 months after it finishes.

I am very lucky that my tax bill is below the £1k (well I guess I would be even luckier if it was over cos I'd be a lot richer) & I quite enjoy the fact that this month I am going to pay the tax that if the DWP/HMRC got their act together I would have had to pay in April 2016. If they decide to reduce the £1k I guess I will manage to live with it & get a little less interest!

MarkDu

Hi,


I've been asked to submit a self-assessment for 16-17as, unbeknown to me, I was due to pay back some child tax credits for earlier years.


I've filled in the form and submitted it, and is seems I owe less than £50, which is good news. However, it seems that I have missed a substantial tax benefit. In October 2015, following a TUPE between employers, I opted out of the car scheme. I took the cash allowance, which is taxed through payroll. I have a fuel card, which covers all fuel costs, but I then pay back the private mileage at the cost of the fuel used - taken from payroll 1 month retrospectively. For 2016-17 it was an average of 12.5p per mile.


During that period I covered 19,491 business miles. The cost of business fuel in that time was £2436.37 - although this is paid by my employer to the fuel card provider of course.


Using the tax allowance I have 10k miles at 45p/mile and 9491 miles at 25p/mile which is £6872.75. The difference between what my company has covered and the HMRc rate is £4436.38.


Is this what I should claim and where in the self-assessment do I add this - do I need to provide further evidence?


Many thanks for any help.