Self Assessment: Should I Reduce My Payments On Account?

icicat

Hey all,

So last year 21-22 I earned a net business profit of: £9168.00 for self employed work (alongside my fulltime job) tax due was £2583.40

This tax year 22-23 so far I have only earned a net business profit of: £1795.81.

When filling out my self assessment for 21-22 it has calculated I should pay £1,291.7 as a half payment for 22-23 (taken from 21-22 tax calculation) by end of Jan 23. The other £1,291.7 paid in by July.

So my main question is I'm not entirely sure how much I will earn up to April next year or if I can match last years earnings. Should I reduce my payment on account (I'm filling in my 21-22 self assessment now) or should I leave it as is and just pay the £1795.81 in January and wait until I fill out my 22-23 return in April? If I have still less business profit by then I can just ignore Julys payment and pay what I owe after filling my return and getting the calculation. Though if my tax calculation is less than the £1,291.7 I paid in January would that mean HMRC will automatically refund me the over payed tax? Or will I need to chase that up myself? Or should I just make a note and keep it as payment on account for next years 23-24 tax payment?

Hope that all makes sense any advice would be great as I can never get HMRC on the phone after waiting an hour

[Deleted User]

I would reduce payments on account for 2022/23- go for something realistic with a bit of a margin. Say, profits £5000 - tax at 20% is £1000. Reduce each payment to £500. Thus option is available to you in a section just before the submission.

On the second point - you make the claim for repayment as part of the submission, again near the end of the process.

icicat

Hi Purdy, thanks for the suggestions. I guess it's still 7 months away when the 22-23 tax year is over so maybe the second suggestion makes sense right now as I want to aim to earn as much as I can. I'm pretty sure the tax will be more than £1,291.7 so If I pay that in Jan, at least by July I would have known how much I owe. So if profit is just under 2021-22 profit can I just rule out the July payment (If I can fill in my return before July) and it should predict a new payment on account figure based on the 22-23 profits?

[Deleted User]

If you submit your return relatively quickly after 5th April there would be no requirement to pay anything in July if what you estimate is correct. For example, if your tax return indicates a liability of £1200 the payments on account for 2022/23 will revert to £600 each. 

icicat

ok Thanks purdy, Yeah will just leave POA it as is and submit, will just need to remember to submit the return in April

[Deleted User]

icicat said:

ok Thanks purdy, Yeah will just leave POA it as is and submit, will just need to remember to submit the return in April

Not necessarily - even if you submit at the end of June the payments on account should be amended. 

icicat

Ok so I submited my return. At the moment I'm on my self assesment homepage and under 'View Account' it says 'You have nothing to pay.' so do I need to wait until this updates with my tax bill before paying anything in?

Also the tax bill comes to £3,104.07. I made two payments on account for 2021-22 of £1,291.70 (equals to 2020-21 tax bill) so this means I only need to pay £520.67 and the additional £1,552.03 which is payment on account for 2022-23, correct?

Do these payments need to be paid in whenever as long as it's before 31st of January? The reason I am filling in my return now is I need to get Tax Calculations, for past 2 tax years and Tax Year Overviews, for past 2 tax years for a remortgage. Though can I get these now as I have submited the return? Or need to wait after HMRC has check it and confirm my tax bill? Thanks

[Deleted User]

First two paragraphs - all correct. 

Last paragraph - first sentence correct. However, I believe must mortgage companies require an SA302. Check out here:

https://www.gov.uk/sa302-tax-calculation

Jeremy535897

Mortgage companies now require the tax overview from the personal tax account, and the tax calculation per SA302 that should show the same tax for the year as the tax overview. I think this is because a SA302 could be faked (and if you use commercial software HMRC won't provide one), but the tax overview has to come from the gov.uk site.

icicat

Great thanks for the replies guys. I'll check now and hopefully the bill is ready as need to get those SA302s sent to the mortgage broker. I wish I done it sooner as it feels like interest rates are jumping up by the day (yikes!)