Seiss took SE income over threshold BUT Martins advice saved a fortune on Tax bill amount.

Brainbox

In case it is helpful for anyone I wanted to highlight a small success, inspired by checking Martins advice site once again. My partner is a sold trader who lost all work in creative industries during the pandemic and was therefore in receipt of Seiss payments. These were a godsend and effectively kept his earnings on the same level they have been on for many years - just below the lower threshold for paying any tax. Having just completed the return for 21/22 he was shocked as forgot that 2 of the Seiss payments were automatically added to his earnings as taxable, and also having earned quite a bit more than usual, was way over the usual declaration amount. This mean going from a simple £158 NI bill to a tax demand of over £5000. Having read that payments on account are estimates and that you can request to have them reduced if you have reason to believe you will not be earning as much next year - he did this. His payments on account were agreed to be set at £200 instead if over £2500. This could be very helpful for anyone else in a similar position - of earning an unusually high amount in the first post pandemic year. Be sure though - as my partner is - that his earning will drop back down to his regular schedule of earnings for the current year. I hope it can help some others.

Dazed_and_C0nfused

You are broadly along the right lines but POA really have nothing to do with your earnings.

They are purely based on the Self Assessment liability (ignoring Class 2 NI and CGT).

If the amount payable for 2022:23 is £400 or less then there is no problem but if the liability is say £800 each POA will be reinstated to the tune of £400 and interest would be charged on anything paid after the normal due date for payment.

It doesn't matter why the liability is £800.

DullGreyGuy

Brainbox said:
inspired by checking Martins advice site once again

Which site?

You mean this site? Martin sold it years ago to MoneySupermarket for £X0,000,000

Brainbox

Thanks Dazed. I am just a regular human with no training in accounting and struggling to understand your use of jargon sorry. Payments on account must have something to do with earnings because my partner is never usually asked to pay them. It must be due to him earning more than usual, no? I have no idea what liability means and he does not pay capital gains tax as just a simple sole trader. I was pointing out the reasons for going over the threshold so that others in the same position could understand and therefore benefit from the same knowledge. If we didn't know that the payments on account could be negotiated down, one of us would have had to declare bankrupt in order to cover the debt albeit relatively small for some people. It would have a devastating effect on us. 
And Brainbox - yes I meant money saving expert site. I don't care who owns it. I find it very helpful. Isn't that the point? Im getting the impression then that the point of being on this forum is to prove yourself right rather than to find help or be helpful to others (sad face).

Jeremy535897

The point here is that if your income wholly or mostly derives from self employment, and you have an exceptional year that won't be repeated, you can claim to reduce the payments on account that are based on the exceptional year. As Dazed says, if you go too far and reduce the payments on account by too much, you will pay some interest. To accountants it is second nature, but this forum demonstrates that it is a concept that most non-accountants don't really grasp.