Question about self-assessment

xxxpinkladyxxx

I'm just doing my self-assessment for 2017-18 and I'm a bit confused, as I don't remember having this last year (last year was the first year I filed a self-assessment as I wasn't self-employed before then).

So it says:

Total amount due for 2017-18 = £X
Plus
First payment on account for 2018-19 = £Y
Total to be added to Self Assessment account due by 31 January 2019
HM Revenue and Customs will add this amount to your Self Assessment statement of account. It doesn't include any 2017 to 2018 payments on account you may have made or any other amounts outstanding. To help you to decide how much, if anything, to pay by the due date, check your Self Assessment account and use the information above until it transfers over.

Please note: Please carefully check the figures and the amounts due, which are calculated using the amounts you have entered. HM Revenue and Customs will allocate your payments against any Class 2 National Insurance first unless you have outstanding debts.

£X + £Y
Second payment on account for 2018-19 will be due by 31 July 2019 £Y

So I assume I only have to pay £X for now, and then £Y by 31st July, but why do I have to pay £Y by then? Is that just like a deposit for next year? Sorry if this is a dumb question, but I'm confused and don't want to get it wrong. Thanks.

p00hsticks

This is probably better over on the Cutting Tax board

https://forums.moneysavingexpert.com/forumdisplay.php?f=22


Basically Y is a payment on account to ensure you don't get too far behind in paying the tax you owe


https://www.gov.uk/understand-self-assessment-bill/payments-on-account

calcotti

You may be better posting your query in the Cutting Tax forum. This forum deals with welfare benefits rather than taxation.

Darksparkle

No Y by 31 January 2019 as it says.

You have to pay your bill for 2017/18 by 31st January 2019. You need to pay your first payment on account for 2018/19 by the same date.

Your second payment on account for 2018/19 has to be paid by 31 July 2019. You'll then pay anything outstanding for 2018/19 by 31 January 2020.

2018/19 is the current tax year so your payment on account is for the current year, not the next year. Youre essentially paying it in installments rather than one bill

pramsay13

You maybe didn't have this before if your self-assessment was below a certain amount so you are allowed to pay in one lump sum in arrears (by 31st January 2019 for the tax year 17/18).
If your new tax bill is over a certain amount you have to pay half of the estimated 18/19 bill when you are paying the previous year's tax bill (by 31st January 2019) and half after the tax year ends (by 31st July 2019). When you then do the assessment for the 18/19 tax you will either owe more or less and they will expect a payment or send a refund.

xxxpinkladyxxx

Thanks. That makes sense. Yeah, my self-employed earnings last year were under the threshold. I always put 20% of whatever I earn into a separate savings account so I'm never going to struggle to pay it, but I guess it doesn't make any difference.

Dazed_and_confused

There is one very important thing you need to remember when you come to do next year's return (2018:19).

You do not get any credit on your return for the payments you have already made towards your bill for 2018:19 so say for example 2017:18 bill was £3,000, payable on 31 January 2019, and 2018:19 payments on account were £1,500 each, payable 31 January 2019 and 31 July 2019.

When you complete your Self Assessment return for 2018:19 say you've had a good year it might that the liability for that year is £4,000. It isn't £4,000 less £1,500 less £1,500 = £1,000.

The liability is £4,000.

Once you file the return you can then look at your Self Assessment account online and that would show something like,

31/01/19 Balancing Payment 2017:18 £3,000
31/01/19 1st Payment on Account 2018:19 £1,500
31/07/19 2nd Payment on Account 2018:19 £1,500
31/01/20 Balancing Payment 2018:19 £1,000
31/01/20 1st Payment on Account 2019:20 £2,000
31/07/20 2nd Payment on Account 2019:20 £2,000

xxxpinkladyxxx

Dazed_and_confused wrote: »

There is one very important thing you need to remember when you come to do next year's return (2018:19).

You do not get any credit on your return for the payments you have already made towards your bill for 2018:19 so say for example 2017:18 bill was £3,000, payable on 31 January 2019, and 2018:19 payments on account were £1,500 each, payable 31 January 2019 and 31 July 2019.

When you complete your Self Assessment return for 2018:19 say you've had a good year it might that the liability for that year is £4,000. It isn't £4,000 less £1,500 less £1,500 = £1,000.

The liability is £4,000.

Once you file the return you can then look at your Self Assessment account online and that would show something like,

31/01/19 Balancing Payment 2017:18 £3,000
31/01/19 1st Payment on Account 2018:19 £1,500
31/07/19 2nd Payment on Account 2018:19 £1,500
31/01/20 Balancing Payment 2018:19 £1,000
31/01/20 1st Payment on Account 2019:20 £2,000
31/07/20 2nd Payment on Account 2019:20 £2,000

Oh god this has really confused me. So the two lots of £2,000 for Jan 2020 and July 2020, they are payments on account for the following tax year? I just don't want to have to pay tax on money that I haven't yet earned.

pramsay13

xxxpinkladyxxx wrote: »

Oh god this has really confused me. So the two lots of £2,000 for Jan 2020 and July 2020, they are payments on account for the following tax year? I just don't want to have to pay tax on money that I haven't yet earned.

Don't worry too much about it. You don't have to pay tax on money you haven't yet earned.

Just submit your tax return and pay tax for 2017 / 2018 along with half of your 2018 / 2019 tax bill by January 31st 2019. Pay the other half by 31st July 2019 which will be for assumed earnings up to April 2019.

At some point after the tax year ends in April 2019 you complete the self-assessment for 2018 / 2019 and they will balance the payments that you owe or are owed.

Darksparkle

You're not paying for the following year.

Use 2018/19 as an example, the year runs April 2018 to April 2019. You make payments on account for 2018/19 in January 2019 and July 2019 so during the year and shortly after the tax year ends.