Interest accruing for SA liability collected via DD on 31 Jan

intalex

As I understand it, self-assessment liability paid via direct debit takes a few days to show on the online HMRC account/statement.

A relative and I both set up direct debits to collect respective TY23/24 self assessment liabilities on 31 January, and both had these debited from our respective bank accounts promptly on 31 January. Both our HMRC online accounts still show our respective liabilities as overdue, whilst the payments collected via direct debit take the usual few days to show on the online HMRC account.

However, rather unusually, my relative also has interest accruing on the SA liability since 01 February, whereas my account doesn't have any interest accruing. My relative's SA liability is fairly high compared to mine.

Anyone know if it is normal for interest to accrue so swiftly without allowing time for payments to reflect, and more importantly, whether the accrued interest will be reversed automatically once the payment already collected promptly via direct debit will reflect on the HMRC online account/statement?

Thanks in advance!

Dazed_and_C0nfused

intalex said:

As I understand it, self-assessment liability paid via direct debit takes a few days to show on the online HMRC account/statement.

A relative and I both set up direct debits to collect respective TY23/24 self assessment liabilities on 31 January, and both had these debited from our respective bank accounts promptly on 31 January. Both our HMRC online accounts still show our respective liabilities as overdue, whilst the payments collected via direct debit take the usual few days to show on the online HMRC account.

However, rather unusually, my relative also has interest accruing on the SA liability since 01 February, whereas my account doesn't have any interest accruing. My relative's SA liability is fairly high compared to mine.

Anyone know if it is normal for interest to accrue so swiftly without allowing time for payments to reflect, and more importantly, whether the accrued interest will be reversed automatically once the payment already collected promptly via direct debit will reflect on the HMRC online account/statement?

Thanks in advance!

Yes it will be quite normal.

Interest is charged on a daily basis and your Self Assessment account should reflect that.

What you will presumably see in the next few days is the payment allocated with an "effective date of payment" of 31 January 2025.  And if that happens there would be no actual interest charge as the tax was paid on time.

I don't know why you wouldn't have the same (albeit smaller) entry though.  Maybe there is a lower limit before interest starts to be charged?

intalex

Dazed_and_C0nfused said:

What you will presumably see in the next few days is the payment allocated with an "effective date of payment" of 31 January 2025.  And if that happens there would be no actual interest charge as the tax was paid on time.

I don't know why you wouldn't have the same (albeit smaller) entry though.  Maybe there is a lower limit before interest starts to be charged?

Thank you for clarifying this, I assume the accrued interest will just zero out once the payment is allocated with the effective date 31 January?

My relative's SA liability relates to earned income (e.g. bonus spike, salsac adjustments, etc), whereas my SA liability relates to unearned income, so if it's not a threshold leading to different treatments between us on interest accrual, then it might relate to the nature of the income being different perhaps?

Dazed_and_C0nfused

intalex said:

Dazed_and_C0nfused said:

What you will presumably see in the next few days is the payment allocated with an "effective date of payment" of 31 January 2025.  And if that happens there would be no actual interest charge as the tax was paid on time.

I don't know why you wouldn't have the same (albeit smaller) entry though.  Maybe there is a lower limit before interest starts to be charged?

Thank you for clarifying this, I assume the accrued interest will just zero out once the payment is allocated with the effective date 31 January?

My relative's SA liability relates to earned income (e.g. bonus spike, salsac adjustments, etc), whereas my SA liability relates to unearned income, so if it's not a threshold leading to different treatments between us on interest accrual, then it might relate to the nature of the income being different perhaps?

Assuming the effective date is 31 January then yeah there cannot be an interest charge (assuming you are referring to a liability that was due on 31 January 2025, not say a late paid POA from July 2024).

Your Self Assessment account doesn't contain any information about why the liability occurred so I cannot see that that can be a factor.

intalex

Dazed_and_C0nfused said:

intalex said:

Dazed_and_C0nfused said:

What you will presumably see in the next few days is the payment allocated with an "effective date of payment" of 31 January 2025.  And if that happens there would be no actual interest charge as the tax was paid on time.

I don't know why you wouldn't have the same (albeit smaller) entry though.  Maybe there is a lower limit before interest starts to be charged?

Thank you for clarifying this, I assume the accrued interest will just zero out once the payment is allocated with the effective date 31 January?

My relative's SA liability relates to earned income (e.g. bonus spike, salsac adjustments, etc), whereas my SA liability relates to unearned income, so if it's not a threshold leading to different treatments between us on interest accrual, then it might relate to the nature of the income being different perhaps?

Assuming the effective date is 31 January then yeah there cannot be an interest charge (assuming you are referring to a liability that was due on 31 January 2025, not say a late paid POA from July 2024).

Your Self Assessment account doesn't contain any information about why the liability occurred so I cannot see that that can be a factor.

Indeed both were SA liabilities due on 31 January 2025, no POA applicable for TY23/24 or indeed for TY24/25.

Fair enough, there must be a threshold in play for the different treatment on interest accrual.

Dazed_and_C0nfused

There is some useful information here.

Interestingly part of the text has been redacted.

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam134001

There is no lower monetary (de minimis) limit for charging interest.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Ayr_Rage

I have been making 31st January payments since the inception of SA and paid on that date this year.

My account showed OVERDUE for 3 days and on the 4th February interest was added, this is the first time this has ever happened.

It usually just take a few days to show as paid but interest has never been added.

I called at 6pm on the 4th and they said my balance was zero and showing as paid on 31st.

Checked again the following morning and account showing nothing to be paid, payment made on 31st, interest had disappeared.

An annoying glitch it seems.

intalex

Ayr_Rage said:

I have been making 31st January payments since the inception of SA and paid on that date this year.

My account showed OVERDUE for 3 days and on the 4th February interest was added, this is the first time this has ever happened.

It usually just take a few days to show as paid but interest has never been added.

I called at 6pm on the 4th and they said my balance was zero and showing as paid on 31st.

Checked again the following morning and account showing nothing to be paid, payment made on 31st, interest had disappeared.

An annoying glitch it seems.

Did you pay by Direct Debit?

On our side, both accounts are still appearing as overdue this morning (relative's with incremented accrued interest), as payments not reflecting yet.

Dazed_and_C0nfused

I don't think it's a "glitch", it's simply reflecting the facts.

As of today £x is overdue and accruing interest is being calculated based on the amount overdue and current HMRC late payment interest rates.

Once the overdue amount is paid the actual interest charge will be calculated.  If the due date for payment was 31 January 2025 and the effective date of payment of the payment allocated to the charge is also 31 January 2025 there won't be an interest charge.

It is a little surprising the payments haven't been allocated yet but I guess 31 January will be the busiest day by far for both Self Assessment returns and payments so probably nothing to worry about.  Just yet.

intalex

Dazed_and_C0nfused said:

I don't think it's a "glitch", it's simply reflecting the facts.

As of today £x is overdue and accruing interest is being calculated based on the amount overdue and current HMRC late payment interest rates.

Once the overdue amount is paid the actual interest charge will be calculated.  If the due date for payment was 31 January 2025 and the effective date of payment of the payment allocated to the charge is also 31 January 2025 there won't be an interest charge.

It is a little surprising the payments haven't been allocated yet but I guess 31 January will be the busiest day by far for both Self Assessment returns and payments so probably nothing to worry about.  Just yet.

Personally, I consider it a little provoking and unnecessary to even suggest any kind of interest in full knowledge of their own backlog of payment allocations. They should hide this at least until their backlog is clear, if only to avoid people panicking by thinking there is a problem with allocating their payment correctly (e.g. incorrect reference).

Also begs the question, is it a person allocating these payments??

mybestattempt

intalex said:

Dazed_and_C0nfused said:

I don't think it's a "glitch", it's simply reflecting the facts.

As of today £x is overdue and accruing interest is being calculated based on the amount overdue and current HMRC late payment interest rates.

Once the overdue amount is paid the actual interest charge will be calculated.  If the due date for payment was 31 January 2025 and the effective date of payment of the payment allocated to the charge is also 31 January 2025 there won't be an interest charge.

It is a little surprising the payments haven't been allocated yet but I guess 31 January will be the busiest day by far for both Self Assessment returns and payments so probably nothing to worry about.  Just yet.

Personally, I consider it a little provoking and unnecessary to even suggest any kind of interest in full knowledge of their own backlog of payment allocations. They should hide this at least until their backlog is clear, if only to avoid people panicking by thinking there is a problem with allocating their payment correctly (e.g. incorrect reference).

Also begs the question, is it a person allocating these payments??

No, it won't be a person. It's simply a timing issue that automatically corrects.

I suspect that the two non banking days, that is, the the weekend immediately following the 31st January 2025 might be at play.