Should I reduce HMRC payments on account?

sheramber

I did say any necessary adjustment 
 In your case the amount due was higher than the total of the POA set up so they were not amended and the extra is your balancing payment in January  2021, rather than increasing the  POA's.
 Had your amount due was less than the total of the POA' s  - as the OP is expecting- then they would be reduced accordingly. 

rundmc-k

Thanks everyone for the responses, very helpful. So my plan will be to make the January payment as is, then submit my 20/21 tax return asap after next April, and hopefully my July 21 payment will be reduced down to very little.

Dazed_and_C0nfused

rundmc-k said:

Thanks everyone for the responses, very helpful. So my plan will be to make the January payment as is, then submit my 20/21 tax return asap after next April, and hopefully my July 21 payment will be reduced down to very little.

Sort of.

If your 2020:21 liability is less than the payments on account for 2020:21 then both POA would be reduced.  Normally any overpayment on the first POA would be allocated to the second POA leaving less to actually pay in July but if you file early and claim a refund on your return then HMRC may refund the amount overpaid on the first POA as the second POA isn't payable until the end of July.

For example

2020:21 1st POA = £8,000
2020:21 2nd POA = £8,000

2020:21 return shows tax due of £9,000.

Each POA would be reduced to £4,500.  It wouldn't be 1st POA £8,000 and 2nd POA £1,000.

rundmc-k

Ah, I understand, so there would likely be an HMRC refund and a reduced 2nd POA as well then. Thanks for the explaination