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2nd tax return - payment on account

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Hi, I'm looking for some advice with regards to payment on account if possible. 
My payment on account last year over 2 payments equals £2705.48.
This year my tax payment due is £1593.66, my question is how does payment on account work, how much am I likely going to need to pay? 
My thinking is the payment on account should cover my tax payment, and I will need to pay a further payment of £481.84 to cover next years payment on account?  I may be completely wrong on this, it's my 2nd tax return and I'm not sure how payment on account works - sorry but thanks in advance! :smile:

Comments

  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Eighth Anniversary 1,000 Posts Photogenic Name Dropper
    edited 1 December 2020 at 8:09PM
    Take one year at a time. 

    2019/20 - Due by 31 Jan 2021 - £1593.66 less POA £2705.48 - £1111.82 overpaid.

    2020/21 - Payment on account due - £796 .83 . But you can net the £1111.82 against this leaving you still £314.99 in credit. You could claim this or set it against the second payment on account due in July of £796.83 making it £481.84.

    Your understanding is pretty accurate. :)
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,578 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 1 December 2020 at 8:39PM
    You will probably find your Self Assessment account looks like this a few days after you have filed your return,

    31/01/2020 1st POA for 2019:20
    £1,352.74 reduced to £796.83

    31/07/2020 2nd POA for 2019:20
    £1,352.74 reduced to £796.83

    Credit balance £1,111.82

    Becoming due,

    31/01/2021 Balancing Payment for 2019:20
    £0.00

    31/01/2021 1st POA for 2020:21
    £796.83

    31/07/2021 2nd POA for 2020:21
    £796.83
  • With a little bit of overpayment interest credited to make it completely indecipherable.
  • Payment on account is just you paying your estimated  income tax in two instalments in advance.  
    Of course I’m no expert. 
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,578 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 2 December 2020 at 6:14PM
    Payment on account is just you paying your estimated  income tax in two instalments in advance.  
    In what way is it in advance?

    People liable on PAYE will have normally paid some tax for 2020:21 by the end of April 2020.

    The first Self Assessment payment on account for 2020:21 isn't payable until the end of January 2021, nine months later.
  • Taken from the HMRC website. 

    Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

    You have to make 2 payments on account every year unless:

    • your last Self Assessment tax bill was less than £1,000
    • you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

    Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.


    Of course I’m no expert. 
  • Taken from the HMRC website. 

    Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

    You have to make 2 payments on account every year unless:

    • your last Self Assessment tax bill was less than £1,000
    • you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings

    Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.


    Indeed - ‘advance payments towards your TAX BILL’  - not in advance of the tax year. 
  • That’s what I meant. 
    Of course I’m no expert. 
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