Self assessment tax return low earning year - claim refund or not?

LadderTom

Hi there,

First post so excuse any clumsiness!

I'm self-employed in an industry that's been severely affected by the pandemic, with the result that FY20-21 was a low earner for me, about half of what would be usual. Consequently I'm owed a tax refund due to my previous payments-on-account being higher than tax due for the last tax year. 

My question is, as I expect my income to return to normal (hopefully!), should I claim my tax refund or would it be best to let my tax account remain in credit so I don't get walloped with a big tax plus POA bill in Jan 2023? I have horrible memories of my first proper grown-up tax bill lol 

Thanks in advance!

Jeremy535897

Did SEISS grants not make a contribution?

If you don't need the money, you may decide to leave it with HMRC. At least you may earn 0.5% tax free interest. HMRC may however simply decide to repay you. For more structure, you can pay in advance with a budget payment plan:
https://www.gov.uk/pay-self-assessment-tax-bill/pay-weekly-monthly

LadderTom

Jeremy535897 said:

Did SEISS grants not make a contribution?

If you don't need the money, you may decide to leave it with HMRC. At least you may earn 0.5% tax free interest. HMRC may however simply decide to repay you. For more structure, you can pay in advance with a budget payment plan:

Yeah they certainly did but wasn't full replacement because of mix of zero-hours PAYE and invoiced work through the relevant tax years. Luckily enough I'm not desperate for the cash so if it sits there that's probably best! Thanks!

smashinglynaive

LadderTom said:

Jeremy535897 said:

Did SEISS grants not make a contribution?

If you don't need the money, you may decide to leave it with HMRC. At least you may earn 0.5% tax free interest. HMRC may however simply decide to repay you. For more structure, you can pay in advance with a budget payment plan:

Yeah they certainly did but wasn't full replacement because of mix of zero-hours PAYE and invoiced work through the relevant tax years. Luckily enough I'm not desperate for the cash so if it sits there that's probably best! Thanks!

I have no idea why anyone would pay tax before it's due under the current system.

The current system is cheeky AF and requires people to pay tax at least 6 months before it's due, for reasons.

Hold to it and pay it to them when required, not a day before.

sheramber

Paye people pay tax from the first pay day. Earnings April 20, tax paid April 20. Earnings May 20, tax paid May 20 etc.

Self employed pay  some tax at the earliest  10 months    after they earned it.  Earned April 20 1 st payment on account January 2221 , second July 21.