Self assessment payment reminders

DRS1

Dazed_and_C0nfused said:

DRS1 said:

If you take the topic here, people saying that the tax is not due until January so HMRC should not send them reminders. HMRC will say it is due from April and if they didn't send reminders then people may forget to pay or to put money aside to pay.

Since when?

The payment dates are in January and July.  That is when the payment is due not before.

Oh and while we are moaning about self assessment let's not forget payments on account - which mean you are paying tax in advance.

I genuinely don't understand that logic.  Tax paid under the Self Assessment POA regime is payable in the January after the start of the tax year and the July after the end of the tax year.

Whilst someone in employment or getting a pension that is paid under PAYE could well be paying tax within a few days of the tax year starting!  I know which I'd prefer 😉

When you start under Sch D you effectively pay two years tax in one go.  The POAs keep you paying tax for the year ahead.  Under Sch E you only ever pay tax for the current year.  So the Sch D taxpayer has always paid one year's more tax than under Sch E.

Dazed_and_C0nfused

DRS1 said:

Dazed_and_C0nfused said:

DRS1 said:

If you take the topic here, people saying that the tax is not due until January so HMRC should not send them reminders. HMRC will say it is due from April and if they didn't send reminders then people may forget to pay or to put money aside to pay.

Since when?

The payment dates are in January and July.  That is when the payment is due not before.

Oh and while we are moaning about self assessment let's not forget payments on account - which mean you are paying tax in advance.

I genuinely don't understand that logic.  Tax paid under the Self Assessment POA regime is payable in the January after the start of the tax year and the July after the end of the tax year.

Whilst someone in employment or getting a pension that is paid under PAYE could well be paying tax within a few days of the tax year starting!  I know which I'd prefer 😉

When you start under Sch D you effectively pay two years tax in one go.  The POAs keep you paying tax for the year ahead.  Under Sch E you only ever pay tax for the current year.  So the Sch D taxpayer has always paid one year's more tax than under Sch E.

Your timings are out.

I agree that some people can have to pay tax for two different tax years at the same time.

But the tax for year 1 of those years is being paid 9 months after the tax year has ended.

And the POA for year 2 of those years is being paid 9 months after that tax year has started.

It is a surprise to some people but you definitely aren't paying for the "year ahead".

TheSpectator

DRS1 said:

Dazed_and_C0nfused said:

DRS1 said:

If you take the topic here, people saying that the tax is not due until January so HMRC should not send them reminders. HMRC will say it is due from April and if they didn't send reminders then people may forget to pay or to put money aside to pay.

Since when?

The payment dates are in January and July.  That is when the payment is due not before.

Oh and while we are moaning about self assessment let's not forget payments on account - which mean you are paying tax in advance.

I genuinely don't understand that logic.  Tax paid under the Self Assessment POA regime is payable in the January after the start of the tax year and the July after the end of the tax year.

Whilst someone in employment or getting a pension that is paid under PAYE could well be paying tax within a few days of the tax year starting!  I know which I'd prefer 😉

When you start under Sch D you effectively pay two years tax in one go.  The POAs keep you paying tax for the year ahead.  Under Sch E you only ever pay tax for the current year.  So the Sch D taxpayer has always paid one year's more tax than under Sch E.

Your last sentence shows a fundamental misunderstanding of the actual position.

As D&C higjlights, a POA for a year is 9 months into the tax year so not sure how you can conclude that having paid half your tax (at most) 9 months into a tax year is paying in advance. You then pay your 2nd POA 3 montha after the end of the tax year and any balancing payment 9 months after. Absolutely no 'paying in advance'

Nomunnofun1

DRS1 said:

Dazed_and_C0nfused said:

DRS1 said:

If you take the topic here, people saying that the tax is not due until January so HMRC should not send them reminders. HMRC will say it is due from April and if they didn't send reminders then people may forget to pay or to put money aside to pay.

Since when?

The payment dates are in January and July.  That is when the payment is due not before.

Oh and while we are moaning about self assessment let's not forget payments on account - which mean you are paying tax in advance.

I genuinely don't understand that logic.  Tax paid under the Self Assessment POA regime is payable in the January after the start of the tax year and the July after the end of the tax year.

Whilst someone in employment or getting a pension that is paid under PAYE could well be paying tax within a few days of the tax year starting!  I know which I'd prefer 😉

When you start under Sch D you effectively pay two years tax in one go.  The POAs keep you paying tax for the year ahead.  Under Sch E you only ever pay tax for the current year.  So the Sch D taxpayer has always paid one year's more tax than under Sch E.

As others have said - fundamentally wrong. 

Let’s say that you started self-employment on 6th April 2023. How many years tax will you have paid by 5th April 2026? 

Firstly, unlike those on PAYE, NO TAX at all is payable until 31st January 2025 - almost 22 months after commencement!



By 5th April 2024 -

Under Self-employment Zero! Under PAYE - 1

By 5th April 2025 - 

Under Self- employment- 1 full tax year plus 1 payment on account (which may not equal half of the second year). Let’s say 1.5 years for sake of argument even though 2024/25 will not be fully paid until January 2026. 

Under PAYE - 2 full years. 

By 5th April 2026 - 

Under Self- employment- 2 full tax years plus 1 payment on account (which may not equal half of the second year). Let’s say 2.5 years for sake of argument even though 2025/26 will not be fully paid until January 2027

Under PAYE - 3 full years. 

So - under PAYE you are fully paid up for the three tax years. 

Under Self-employment only two tax years have been fully paid with only one payment on account made for 2025/26. Another payment on account is due nearly four months later and the final amount only payable almost ten months later. 

The old schedule D for the self-employed was repealed in 2005. Schedule E has not existed since 2003!

DRS1

All I will say is that I switched from Sch E to Sch D back in the 80s and I do not recall any year when I was paying no tax!
I also think there is a clue in the name - Payment on Account.  It is paying in advance for tax that is not yet due.
Anyway I know that I am not going to convince anyone else of my view so I shall shut up now

eskbanker

DRS1 said:

I also think there is a clue in the name - Payment on Account.  It is paying in advance for tax that is not yet due.

But where PoA is needed, that's defining when it's due!  It's earlier than it would be for smaller amounts that can be collected by the following January, but that's not the benchmark that applies, the comparison is being made with PAYE, where the tax is collected in real time.

Nomunnofun1

DRS1 said:

All I will say is that I switched from Sch E to Sch D back in the 80s and I do not recall any year when I was paying no tax!
I also think there is a clue in the name - Payment on Account.  It is paying in advance for tax that is not yet due.
Anyway I know that I am not going to convince anyone else of my view so I shall shut up now

The point that you previously made was that 

‘the Sch D taxpayer has always paid one year's more tax than under Schedule E’ 

That, by any interpretation, is not the case.