Self assessment money on account

Juliette100

I wanted to ask about a self assessment query re my savings.  For 23/24 I earned 25k salary all paye. I also earned interest on savings amounting to gross 7k.  For 23/24 I have tax on my savings.  For 24/25 my earnings will be lower than the previous year approx 10k but my interest on savings higher as I have a bond coming to maturity.  My question is around payment on account. As my earnings will be lower for 24/25 and all paye do I have to pay money on account or can I reduce to 0. Or does interest count as earnings as I read money on account is due if I pay less than 80% tax paye. If interest counts as earnings then I won’t qualify for the 80% paid at source but if this 80% is purely on salary then I’d be inclined to reduce poa as I am going to be earning 50% less salary than 23/24. 

friolento

You will pay tax according to your tax code

Your tax code gets calculated from the income HMRC expect you to get. 

Your Personal Tax Account shows you details of what HMRC believe your income will be.

You can change your expected income in your Personal Tax Account, and HMRC will issue a new tax code.

A new tax code won’t change your tax bill retroactively. You might be able to talk to HMRC if your payments on account are unreasonably high

TheSpectator

You shouldn't reduce your 24/25 POA's based on one source of income reducing as your 24/25 liability will be calculated on all your sources of income. Reducing your POA too much will result in interest being charged.

If you only have 2 PAYE and interest it shouldn't be to difficult to calculate what your 24/25 liability will be just now.

Dazed_and_C0nfused

TheSpectator said:

You shouldn't reduce your 24/25 POA's based on one source of income reducing as your 24/25 liability will be calculated on all your sources of income. Reducing your POA too much will result in interest being charged.

If you only have 2 PAYE and interest it shouldn't be to difficult to calculate what your 24/25 liability will be just now.

Spot on, the source of income are irrelevant for POA purposes.

Juliette100

Thank you.  I was treating bank interest as not part of the paye earnings but if this is considered all earning (interest and salary) I shan’t reduce or at least I’ll aim to  calc expected total income and make an advanced payment in Jan / July 

TheSpectator

Juliette100 said:

Thank you.  I was treating bank interest as not part of the paye earnings but if this is considered all earning (interest and salary) I shan’t reduce or at least I’ll aim to  calc expected total income and make an advanced payment in Jan / July 

Or submit your Tax Return asap after 5th April and your actual liability will be known.