self assessement, what does balancing payment, and 1 st payment

Jeremy535897

pete1975 said:

EdSwippet said:

pete1975 said:

...
minus Tax deducted
...
Interest received from UK banks and building societies £17.50

Not related to your actual question, but ... really? UK banks and building societies have been paying interest gross (without any tax deduction) since 2016. Just checking ...

hi, i checked my tax self assessment and i always fill this ,  do i not need to then?  I would earn about £70 interest over the year

Yes you do need to fill it in. If your only interest is £70, you should have no liability on it, but more to the point you should almost certainly have no tax credit either. Somewhere further down I assume it must have asked whether this interest is taxed or untaxed, and you have selected "taxed at basic rate" when it almost certainly wasn't. Is the £70 just interest on a UK bank account? If so, it won't have had tax deducted at source.

polymaff

You need to tell us the amount and the account, for each of the components of this £70

Otherwise it is all guesswork.

EdSwippet

pete1975 said:

hi, i checked my tax self assessment and i always fill this ,  do i not need to then?  I would earn about £70 interest over the year

You do fill out the 'UK interest' section. If you look at it, you should see it splits into three parts, something like this:

You have said that you received UK interest in the tax year 6 April 2019 to 5 April 2020. Please complete the following questions.

...

Taxed UK interest etc. Enter net amount after tax has been taken off: (optional) [entry box]
Untaxed UK interest etc (amounts which have not been taxed). Enter total amount: (optional) [entry box]

Untaxed foreign interest (up to £2,000) - amounts which have not had tax taken off. Enter total amount: (optional) [entry box]

You almost certainly want to put your ordinary interest from UK banks and building societies in the second of these, not the first (or the third!). This is poor design on the part of the online self assessment system -- putting something rarely used first and commonly used second is stupid. The 'help' for these sections isn't exactly a model of clarity, either.

Probably a hold-over from when interest was paid net of 20% tax rather than gross, pre-2016, but that's no excuse for them not to have updated this part of self-assessment to reflect a tax change made over four years ago. You won't be the first person to fall into this trap, nor the last.

pete1975

polymaff said:

You need to tell us the amount and the account, for each of the components of this £70

Otherwise it is all guesswork.

thats the amount if shows on my santander123 account, the interest earned.   

Jeremy535897

pete1975 said:

polymaff said:

You need to tell us the amount and the account, for each of the components of this £70

Otherwise it is all guesswork.

thats the amount if shows on my santander123 account, the interest earned.   

This will be paid gross. The result is that you have underpaid tax by £17.50. See https://www.gov.uk/self-assessment-tax-returns/corrections

pete1975

Jeremy535897 said:

pete1975 said:

polymaff said:

You need to tell us the amount and the account, for each of the components of this £70

Otherwise it is all guesswork.

thats the amount if shows on my santander123 account, the interest earned.   

This will be paid gross. The result is that you have underpaid tax by £17.50. See https://www.gov.uk/self-assessment-tax-returns/corrections

Ok,  so i need to be filling int he Untaxed box for Uk interest.  I wont have anything like that sort of interest now because i used it  so if most £5 a month and i dont have any other accounts. 

 

polymaff

Correct !

Can't comment on your second sentence. ...

TheCyclingProgrammer

unholyangel said:

Balancing payment is the amount required to "balance" your liability (ie satisfy it) for that tax year/return. 

The payment on account is a prepayment towards next years liability and will be 50% of this years liability. 

Close, but not quite. The balancing payment is the balance of what you owe for the *previous* tax year (after accounting for any previously made payments on account). The payments on account are payment towards *this* tax year's liability. They are made on the assumption that you will earn at least as much as the previous tax year and therefore you will have a similar tax bill.

The first payment on account is made 9 months into the tax year to which it relates and the second one is made three months after it ends. You could describe them as pre-payments insofar as they are generally made before you submit a tax return for the year in question, but they are still payments in arrears with respect to the period they relate to.

unholyangel

TheCyclingProgrammer said:

unholyangel said:

Balancing payment is the amount required to "balance" your liability (ie satisfy it) for that tax year/return. 

The payment on account is a prepayment towards next years liability and will be 50% of this years liability. 

Close, but not quite. The balancing payment is the balance of what you owe for the *previous* tax year (after accounting for any previously made payments on account). The payments on account are payment towards *this* tax year's liability. They are made on the assumption that you will earn at least as much as the previous tax year and therefore you will have a similar tax bill.

The first payment on account is made 9 months into the tax year to which it relates and the second one is made three months after it ends. You could describe them as pre-payments insofar as they are generally made before you submit a tax return for the year in question, but they are still payments in arrears with respect to the period they relate to.

I can understand arguments that it's not a prepayment because PoA are due on those dates and a prepayment is settlement of a liability before it's due but for two reasons (one you mentioned - the liability occurring on submission of the return), I'd still class them as prepayments.