Need help understand how tax payments with self assessment, balancing payments work

pete1975

evening all i'm getting myself quite confused with self assessment and payments.

without boring everyone we claim child benefit well my wife does but as i earnt over 50k in 2018-2020 i had to pay some/most back (i also get around 6k in taxable benefits - medical etc) im paye but complete via self assessment because of the child benefit 

from april 2021 i paid more into my pension to get my pension built up and got my salary at 43.5k plus taxable benefits.

I had a notification from HRMC today and went online and see that i have to make another payment of £1778 by July 2021

I thought i had done my calculations correct that my yearly tax bill would be about £1500 but now it seems i have a payment in July 2021 and i assume another in December 2021.  

can anyone offer advice or point me somewhere else i can ask, just going round it circles and i cannot grasp it

Dazed_and_C0nfused

Presumably you haven't yet filed your 2020:21 return yet.

When you do file it your own payments will NOT be reflected in the calculation so if you have a liability of say £4,000 then that is what you would owe for 2020:21.

But if you check your account a few days later you will the £4,000 due for 2020:21 will have been split into three parts,

£1778.70 due 31 January 2021
£1778.70 due 31 July 2021
£442.60 due 31 January 2022

If the liability for 2020:21 was only say £3,000 this would become,

£1,500 due 31 January 2021
£1,500 due 31 July 2021
£0 due 31 January 2022
If you had paid both POA of £1,778.70 then you would be due a refund of the excess amount paid (or it would be set against anything else due for payment in January 2022 such as your first POA for 2021:22).

sheramber

Payments on account of the next year's liability ( estimates) are automatically set equal to the previous years liability but are split into two payments 
one to be paid by 31January
and the second by 31 July.

When you submit your return  then your liability   will be assessed and if that liability is less than the estimate made ( the sum of the two balancing payments ) the payments on account will be reduced to 50% each.

If the liability is more,  then the payments on account will stand and the extra will be payable as a balancing payment by 31 January of the following year along with a payment on account for the following year.

pete1975

ok thankyou,  ive worked out due to the lower wage that my self assessment bill will be around £1400 for the tax year,  ive just completed my tax return online so hopefully in a few days if i understand correctly then it should adjust online to  reflect that rather than the payment of £1778 by July,  have i understood that correctly?

Dazed_and_C0nfused

Yes, each POA will be amended to £700 and the surplus from what you paid in January will be used to pay the second POA leaving you with a credit of £378.

You may have POA for 2021:22 to pay in January and July 2022 but of your Self Assessment bill is a small proportion of your overall tax liability then POA for 2021:22 may not be required.

pete1975

morning all i logged into my tax account this morning and i can see that it has been updated. For tx year ending 5th April 2021,  It shows £1424.60 and now shows a zero after payments this year.    but then shows under the calculation £1424.00 to be added for 31st january 2022.
So im clear i dont have to make nay payments in July now,  but i still have the £1424.60 payment to make at the end of the year?








I thought I'd check the repayments and interest section aswell while i was logged in and its showing a repayment pending.    It never says why the repayment is being made.    Im assuming perhaps i overpaid but again i dont understand why or how i overpaid. 







Then it shows i have upto £712 which i can request a repayment from

Dazed_and_C0nfused

The £1424.60 is due by 31 January 2022.

£712.30 has been paid on 31 January 2021 and £712.30 has been paid by 31 July 2021.

There isn't an extra £1424.60 due.

Personally I wouldn't bother claiming the £712.30 as you will have to then pay the second POA on 31 July 2021.  Interest rates are just too low to make it worthwhile claiming it back now and then paying it back to HMRC a month later.  Just my opinion though.

[Deleted User]

And the reason that you have overpaid is due to the fact that the total liability for 2020/21 is £1424.60. As £1778.70 has already been paid, £354.10 is available for repayment.

Jeremy535897

Dazed_and_C0nfused said:

The £1424.60 is due by 31 January 2022.

£712.30 has been paid on 31 January 2021 and £712.30 has been paid by 31 July 2021.

There isn't an extra £1424.60 due.

Personally I wouldn't bother claiming the £712.30 as you will have to then pay the second POA on 31 July 2021.  Interest rates are just too low to make it worthwhile claiming it back now and then paying it back to HMRC a month later.  Just my opinion though.

Repayment supplement at 0.5%, tax free and with no risk, is probably as good a return as you'll find elsewhere, so I wouldn't rush to claim a repayment unless you need the money.

pete1975

Dazed_and_C0nfused said:

The £1424.60 is due by 31 January 2022.

£712.30 has been paid on 31 January 2021 and £712.30 has been paid by 31 July 2021.

There isn't an extra £1424.60 due.

Personally I wouldn't bother claiming the £712.30 as you will have to then pay the second POA on 31 July 2021.  Interest rates are just too low to make it worthwhile claiming it back now and then paying it back to HMRC a month later.  Just my opinion though.

thankyou,    The 356.00 is coming by cheque, i thought i had set up a bank account but i guess i missed that off my SA  and seems im too late now to change it.   As you say doesnt seem any point claiming the 712 if i have to pay it back a few weeks later.  I just want to get my tax and SA sorted so i know where i stand each month and finally for the end of the year

Dazed_and_C0nfused

From what you've posted it looks like the next time you would have anything to pay now wouldn't be until 31 January 2023