self asessment charge?

Debby2a

Hi,
On my online self assessment, it says total tax due



£2050


Then it goes on to say that I owe what they call 'first payment on account' - which is £970


Then owe a second payment on account of £970 due by July 2020.



What the hell is this extra payment?


So they're charging me over £1800 to file my tax return??


What don't they ever make things clear???

MovingForwards

Its instalments to pay what is owed, not a fee for filing your account.

Dazed_and_confused

The £2,050 will be for the 2018:19 tax year, which finished several months ago.

The £970 (x 2) will be for the 2019:20 tax year, which is coming to a close in 3 and a bit months.

People filing Self Assessment returns have the luxury of paying some (or all in some cases) of their tax a long time after those under PAYE have had to pay it.

Don't forget that whatever your Self Assessment liability turns out to be for 2019:20 you will have paid £1,940 toward it.

For example if your 2019:20 return shows £2,500 is due then you will only have £560 left to pay plus c£1,250 towards the 2020:21 tax liability. And so on.

polymaff

Debby2a - it sounds as though you've just bumped into Payments-on-Account. The intent of PoAs is to get as much tax as possible out of you asap. You fall into PoA when you are assessed as owing at least £1,000 and if that amount is more than one fifth of your total income tax liability for that tax year. You don't get out of PoA until an assessment doesn't meet that test. When you enter PoA, you get hit hard - as you've, maybe, been.

You can, of course, tell them to reduce your PoA - but they'll be after you if you eventually turn out to have been too optimistic. (they'd say - reckless)

PoA was, originally, only meant to hit a wealthy few.

Just like Income Tax - or, certainly, higher-rates of Income Tax - was.

Happy Christmas !

00ec25

polymaff wrote: »

When you enter PoA, you get hit hard - as you've, maybe, been.!

no you do not , your comments are misleading because you have not set out the relevant timescale showing that a PoA is always partially in arrears

compare that to paying tax every month through PAYE each time you get your earnings. Those on PoA still get to have their money before they pay tax on it - hardly being hit hard ?

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

polymaff

00ec25 wrote: »

no you do not , your comments are misleading because you have not set out the relevant timescale showing that a PoA is always partially in arrears

compare that to paying tax every month through PAYE each time you get your earnings. Those on PoA still get to have their money before they pay tax on it - hardly being hit hard ?

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

Entry into PoA is clearly perceived as a blow by the OP - as it usually is by non-experts, one of whom I was explicitly addressing.

And the issue of relative taxing of PAYE v non-PAYE had already been clearly addressed by others.

And assessments to PoA are not always in arrears - again, something that can spook non-experts.

brianposter

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


Looks like another stupid scheme for making tax more complicated.

Dazed_and_confused

It has lasted for 30+ years so far so I can't see it changing anytime soon.

Most people with a job have to put up with a monthly equivalent. PAYE.

01afraser4

brianposter wrote: »

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


Looks like another stupid scheme for making tax more complicated.

It is actually a fairly simple concept that prevents individuals being surprised by large tax bills with little or no means to pay it.

It is only complicated if you choose to dismiss it or already have a formed opinion that won't change.

polymaff

brianposter wrote: »

Looks like another stupid scheme for making tax more complicated.

It has been around, as D+C says, for some time. The recent change is the scope of PoA spreading to savers; interest being paid gross means that that now-untaxed-at-source income can push significant savers into PoA - and it shocks them, as it does anyone who hasn't been prepared for that initial hit.


Like the OP...:(