Reducing payments on account?

jmb1

I save 40% of all sales income for the purposes of paying my tax bill twice yearly. After a reasonable xmas period I managed to raise just enough to pay my January bill. However despite this due to low sales since January I am defintely not going to save enough by july. It's keeping me awake at night with worry.

I am currently completing my tax return for 2023-2024 in the desperate hope that I can demonstrate lower sales and therefore lower my july 2024 tax bill. But is this even possible? Or am I going to have to go onto a payment plan?

Dazed_and_C0nfused

jmb1 said:

I save 40% of all sales income for the purposes of paying my tax bill twice yearly. After a reasonable xmas period I managed to raise just enough to pay my January bill. However despite this due to low sales since January I am defintely not going to save enough by july. It's keeping me awake at night with worry.

I am currently completing my tax return for 2023-2024 in the desperate hope that I can demonstrate lower sales and therefore lower my july 2024 tax bill. But is this even possible? Or am I going to have to go onto a payment plan?

No it isn't possible, not in the way you describe it.

The POA for 2023-24, payable in January and July 2024, are based on the liability from the 2022-23 return.

But if the 2023-24 return shows a reduced liability then each of the 2023-24 POA would be reduced as, with the exception of 1p (one pence), POA m must always be the same amount.

So say for example the 2023-24 POA are currently £3,000 each.  And your 2023-24 return show liability of £10,000 then the 2023-24 POA would be unchanged at £3,000 each and you would have a balancing Payment due in January 2025 for the remaining £4,000.

If the 2023-24 return shows liability of £4,500 then each of the 2023-24 POA would be reduced to £2,250.  If you had paid £3,000 in January 2024 for the 1st POA then the overpayment of £750 would be automatically allocated to the 2nd POA.

All the above purely relates to amounts which are relevant for POA purposes.

[Deleted User]

Your 2023/24 tax bill is payable as follows: 

Total payable by 31st January 2025 less payments on account made in January 2024 and July 2025. 

Let’s say your payments on account due in January 2024 and July 2024 are both £2500. 

You are now preparing your return and find that your total bill will only be £3000. When you submit the two payments on account will be reduced to £1500 automatically - you will only have to pay £500 in July 2024. 

Get your return in well before 31st July 2024.