Timing of tax payments

Early_Retire_Free

I want to confirm something.

I receive all my income gross and therefore pay tax on self=assessment.

In 2024/25 I will have a one time significant increase in income.

For 2024/25 I would normally pay my tax on 1 January 2025 and 1 July 2025 with a balancing adjustment on 31 January 2026 for any over/underpayment.  The liability on 1 January and 1 July is usually based on the prior years declared income.

Because of the income in 2024/25 those 'interim' payments would be materially lower than my actual liability which I would then settle on 31 January 2026 i.e. the balancing amount.  This would potentially give me up to year to invest the tax due.

Is this correct or is there something in the legislation which requires me to update the interim payments?

Dazed_and_C0nfused

The POA for 2025-26 will be based on the liability in 2024-25.

It does not matter in anyway whatsoever why the liability might be different from one year to another those POA are always based on the liability from the previous tax year.

If however you believe your 2025-26 liability will be less than the POA you can make a claim to reduce the POA.

But the 2025-26 liability will only ever be used to determine the POA for 2026-27 NOT if they are needed for 2025-26.

So for example 2024-25 liability is £10,000 and POA for 2025-26 are created for £5,000 (each POA).

If you expect your 2025-26 return to show liability of only £800 then you can reduce your 2025-26 POA to £400 (each POA).

The £800 is only relevant to determining if POA are required for 2026-27, not if they are required for 2025-26.