How do I adjust my tax due in January (increasing it)

premiumz

[Deleted User] said:

premiumz said:

[Deleted User] said:

premiumz said:

[Deleted User] said:

premiumz said:

So my 20-21 predicted payments were on Jan/July 21. I already submitted my 20-21 accounts which reduced my July payment. That's all done and dusted.
But when I filed my accounts it then put up my January predicted figure, stating what was needed to pay in Jan 22. It mentioned I could reduce this figure if I believe my 21-22 accounts were going to be significantly less than my previous year's accounts.

At that time they were far less than what the predicted figure in Jan 22 made them out to be. So I reduced it a lot based on what the income had been for the last few months in July. However, things picked up after that and so I know my 21-22 accounts will be more than the predicted tax due in Jan 22. This is why I need to increase that figure now and then make the payment.

I hope I have explained that well enough as it does seem slightly confusing when reading it back!

Ah - so I interpreted you incorrectly. You have two options I believe. Ring HMRC and advise that you wish to adjust your payments on account again (phone 8am). Alternatively (and what I would do) is simply make the revised (increased) payment on 31st January. I would then submit your return as soon as possible after 6th April - your payments on account, both for  31st January and 31st July will adjust after that. 

If I do my accounts and predict the next few months and then make a payment based on that. Will they charge me interest if I got it wrong by a few quid? Also, am I meant to pay the full tax on the 21-22 accounts or half of it and the other half in July?

Thanks

Interest is charged by HMRC on late payments at 2.75% per annum. 

You need to understand how payments on account work. 

The payments on account for 2021/22 will based on half of your tax liability for 2020/21. 

Let’s say that your tax liability for 2020/21 is £10000 and, for 2021/22, £14000. 

The tax for 2021/22 is paid as follows:

31st January 2022 £5000 (half of 2020/21)
31st July 2022 £5000 again.

Balance payable (£14000 less 2 x £5000) is £4000. This is due 31st January 2023.

Your POAs for 2022/23 would be £7000 each (half of £14000)

Hi,

Thanks for the response.

So I'll give a hypothetical example of my situation with some made up figures to see if I am on the right page.

I went self-employed in April/May 2019.

I did my 2019-2020 accounts and in January 2021 I had to pay £10,000 (full tax amount for 2019-2020 accounts) + £5000 (predicted for 2020-2021 in advance) and another £5000 in July 2021.

I completed my 2020-2021 accounts before the July 2021 payment was due. This reduced the £5000 figure because I did not earn as much. This figure was reduced automatically once I submitted my accounts.

While I was logged in to my self-assessment portal. It showed me what I would owe in January 2022. It said £8000 for example. However, at that time, things were rough and I knew I wouldn't owe anywhere near that amount.
This is where I noticed an option on the website that basically said, if you think you'll likely owe less, then you can amend the figure due in January 2022 to what you believe it to be.

I lowered it to £1000. However, since then, things have picked up and I believe I now owe closer to £4000 for the whole 2021-2022 accounts. (April 21 - April 22)

So with all that in mind. Do I just amend it to £4000? Or do I split that payment up £2000 in January and £2000 in July?
If I just pay the £4000 in January, do I owe nothing in July?

Many thanks

Pay £2000 now and £2000 in July. 

Thoughts on the above post?

[Deleted User]

premiumz said:

[Deleted User] said:

premiumz said:

[Deleted User] said:

premiumz said:

[Deleted User] said:

premiumz said:

So my 20-21 predicted payments were on Jan/July 21. I already submitted my 20-21 accounts which reduced my July payment. That's all done and dusted.
But when I filed my accounts it then put up my January predicted figure, stating what was needed to pay in Jan 22. It mentioned I could reduce this figure if I believe my 21-22 accounts were going to be significantly less than my previous year's accounts.

At that time they were far less than what the predicted figure in Jan 22 made them out to be. So I reduced it a lot based on what the income had been for the last few months in July. However, things picked up after that and so I know my 21-22 accounts will be more than the predicted tax due in Jan 22. This is why I need to increase that figure now and then make the payment.

I hope I have explained that well enough as it does seem slightly confusing when reading it back!

Ah - so I interpreted you incorrectly. You have two options I believe. Ring HMRC and advise that you wish to adjust your payments on account again (phone 8am). Alternatively (and what I would do) is simply make the revised (increased) payment on 31st January. I would then submit your return as soon as possible after 6th April - your payments on account, both for  31st January and 31st July will adjust after that. 

If I do my accounts and predict the next few months and then make a payment based on that. Will they charge me interest if I got it wrong by a few quid? Also, am I meant to pay the full tax on the 21-22 accounts or half of it and the other half in July?

Thanks

Interest is charged by HMRC on late payments at 2.75% per annum. 

You need to understand how payments on account work. 

The payments on account for 2021/22 will based on half of your tax liability for 2020/21. 

Let’s say that your tax liability for 2020/21 is £10000 and, for 2021/22, £14000. 

The tax for 2021/22 is paid as follows:

31st January 2022 £5000 (half of 2020/21)
31st July 2022 £5000 again.

Balance payable (£14000 less 2 x £5000) is £4000. This is due 31st January 2023.

Your POAs for 2022/23 would be £7000 each (half of £14000)

Hi,

Thanks for the response.

So I'll give a hypothetical example of my situation with some made up figures to see if I am on the right page.

I went self-employed in April/May 2019.

I did my 2019-2020 accounts and in January 2021 I had to pay £10,000 (full tax amount for 2019-2020 accounts) + £5000 (predicted for 2020-2021 in advance) and another £5000 in July 2021.

I completed my 2020-2021 accounts before the July 2021 payment was due. This reduced the £5000 figure because I did not earn as much. This figure was reduced automatically once I submitted my accounts.

While I was logged in to my self-assessment portal. It showed me what I would owe in January 2022. It said £8000 for example. However, at that time, things were rough and I knew I wouldn't owe anywhere near that amount.
This is where I noticed an option on the website that basically said, if you think you'll likely owe less, then you can amend the figure due in January 2022 to what you believe it to be.

I lowered it to £1000. However, since then, things have picked up and I believe I now owe closer to £4000 for the whole 2021-2022 accounts. (April 21 - April 22)

So with all that in mind. Do I just amend it to £4000? Or do I split that payment up £2000 in January and £2000 in July?
If I just pay the £4000 in January, do I owe nothing in July?

Many thanks

Pay £2000 now and £2000 in July. 

Thoughts on the above post?

Not sure what other information that you require - check my post at 2.10pm on 23rd. I don’t see what what other options there are.

premiumz

purdyoaten2 said:

premiumz said:

purdyoaten2 said:

premiumz said:

purdyoaten2 said:

premiumz said:

purdyoaten2 said:

premiumz said:

So my 20-21 predicted payments were on Jan/July 21. I already submitted my 20-21 accounts which reduced my July payment. That's all done and dusted.
But when I filed my accounts it then put up my January predicted figure, stating what was needed to pay in Jan 22. It mentioned I could reduce this figure if I believe my 21-22 accounts were going to be significantly less than my previous year's accounts.

At that time they were far less than what the predicted figure in Jan 22 made them out to be. So I reduced it a lot based on what the income had been for the last few months in July. However, things picked up after that and so I know my 21-22 accounts will be more than the predicted tax due in Jan 22. This is why I need to increase that figure now and then make the payment.

I hope I have explained that well enough as it does seem slightly confusing when reading it back!

Ah - so I interpreted you incorrectly. You have two options I believe. Ring HMRC and advise that you wish to adjust your payments on account again (phone 8am). Alternatively (and what I would do) is simply make the revised (increased) payment on 31st January. I would then submit your return as soon as possible after 6th April - your payments on account, both for  31st January and 31st July will adjust after that. 

If I do my accounts and predict the next few months and then make a payment based on that. Will they charge me interest if I got it wrong by a few quid? Also, am I meant to pay the full tax on the 21-22 accounts or half of it and the other half in July?

Thanks

Interest is charged by HMRC on late payments at 2.75% per annum. 

You need to understand how payments on account work. 

The payments on account for 2021/22 will based on half of your tax liability for 2020/21. 

Let’s say that your tax liability for 2020/21 is £10000 and, for 2021/22, £14000. 

The tax for 2021/22 is paid as follows:

31st January 2022 £5000 (half of 2020/21)
31st July 2022 £5000 again.

Balance payable (£14000 less 2 x £5000) is £4000. This is due 31st January 2023.

Your POAs for 2022/23 would be £7000 each (half of £14000)

Hi,

Thanks for the response.

So I'll give a hypothetical example of my situation with some made up figures to see if I am on the right page.

I went self-employed in April/May 2019.

I did my 2019-2020 accounts and in January 2021 I had to pay £10,000 (full tax amount for 2019-2020 accounts) + £5000 (predicted for 2020-2021 in advance) and another £5000 in July 2021.

I completed my 2020-2021 accounts before the July 2021 payment was due. This reduced the £5000 figure because I did not earn as much. This figure was reduced automatically once I submitted my accounts.

While I was logged in to my self-assessment portal. It showed me what I would owe in January 2022. It said £8000 for example. However, at that time, things were rough and I knew I wouldn't owe anywhere near that amount.
This is where I noticed an option on the website that basically said, if you think you'll likely owe less, then you can amend the figure due in January 2022 to what you believe it to be.

I lowered it to £1000. However, since then, things have picked up and I believe I now owe closer to £4000 for the whole 2021-2022 accounts. (April 21 - April 22)

So with all that in mind. Do I just amend it to £4000? Or do I split that payment up £2000 in January and £2000 in July?
If I just pay the £4000 in January, do I owe nothing in July?

Many thanks

Pay £2000 now and £2000 in July. 

Thoughts on the above post?

Not sure what other information that you require - check my post at 2.10pm on 23rd. I don’t see what what other options there are.

Okay. So If I figure out what I would owe so far and then predict the next couple of months. Pay half now and half in July. It will show up on the account as over paying until I submit my accounts in April and then it will recalculate and correct itself with the new accounts? Do you think I should still call the HMRC if I do this or leave it as they will likely just say to do the same thing? Thanks for your help

BraveJan

So, if I filled the 2021 tax return, I can use the same tool, and everything will be okay? I mean, that sounds way too good to be true. I tried to find a proper solution to this issue, and I can tell you, it's not as easy as it seems. I visited many forums and even some other government websites, and no one could actually give me a reasonable answer. Someone told me I would need to have all the paystubs for the previous year. I started to generate all of them on https://www.paystubcreator.net/. And all of a sudden, someone answers on that thread, saying it doesn't work anymore.

[Deleted User]

I stick by what I have said. Quite a few on here are accountants or ex HMRC. I have been working on self-assessment since its inception in 1997 but you are dismissing my advice and the advice of others as ‘too good to be true’. Going by what ‘someone told you’ isn’t necessarily helpful. 

Ultimately you can take or ignore the advice - up to you!